Following a slight decrease of 1.2% last week, mortgage applications increased 6.3% from one week earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending May 5, 2023.
This week’s numbers:
- The Market Composite Index, a measure of mortgage loan application volume, increased 6.3% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index increased 7% compared with the previous week.
- The Refinance Index increased 10% from the previous week and was 44% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 5% from one week earlier.
- The unadjusted Purchase Index increased 5.3% compared with the previous week and was 32% lower than the same week one year ago.
- The refinance share of mortgage activity increased to 28.0% of total applications from 27.2% the previous week.
- The adjustable-rate mortgage (ARM) share of activity decreased to 6.8% of total applications.
- The FHA share of total applications decreased to 12.1% from 12.5% the week prior.
- The VA share of total applications increased to 12.9% from 11.3% the week prior.
- The USDA share of total applications decreased to 0.4% from 0.5% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.48% from 6.50%, with points decreasing to 0.61 from 0.63 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.33% from 6.37%, with points decreasing to 0.51 from 0.54 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.41% from 6.43%, with points decreasing to 1.01 from 1.02 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.91% from 6.01%, with points increasing to 0.58 from 0.55 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 5.35% from 5.48%, with points decreasing to 0.79 from 1.14 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
MBA’s take:
“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth. Mortgage rates for all surveyed loan types decreased over the week with the 30-year fixed rate at 6.48 percent,” said Joel Kan, MBA’s vice president and deputy chief economist.
He continued, “Purchase applications increased 5 percent last week but were still more than 30 percent below last year’s level. Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many homebuyers. Refinance activity jumped 10 percent to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels.”
Bright MLS Chief Economist Dr. Lisa Sturtevant commented:
“Lower mortgage rates could not quell the growing uncertainty among prospective homebuyers. According to the Mortgage Bankers Association, average mortgage rates fell for the second week in a row. However, mortgage applications remained steady from a week ago.
Typically, early May is a very busy time for the housing market. This year, however, the spring market has been subdued. Elevated mortgage rates are one reason some buyers have stayed out of the market. But for others, there is simply just too much uncertainty. Instability in the banking sector, headlines about layoffs, and growing recessions risks are causing prospective homebuyers to hold back.
But it’s not just about economic uncertainty and consumer confidence. More inventory could entice some buyers to get back in the market, even during this uncertain time. However, it does not look like there will be an influx of homes for sale any time soon. The recent dip in mortgage rates has not been enough to persuade homeowners with a sub-3% mortgage rate to list their home. We may have to see rates below 6% before significant numbers of sellers would be willing to trade in their super-low mortgage rate.”
