Third Straight Week of Mortgage Application Decreases

Mortgage applications dipped again this week, down 3.7%, from last week’s 4.6% decrease, the third straight week of decreases, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending May 26, 2023. 

• The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7% on a seasonally adjusted basis from one week earlier. 
• On an unadjusted basis, the Index decreased 5% compared with the previous week. 
• The Refinance Index decreased 7% from the previous week and was 45% lower than the same week one year ago. 
• The seasonally adjusted Purchase Index decreased 3% from one week earlier. 
• The unadjusted Purchase Index decreased 4% compared with the previous week and was 31% lower than the same week one year ago.
• The refinance share of mortgage activity decreased to 26.7% of total applications from 27.4% the previous week. 
• The adjustable-rate mortgage (ARM) share of activity increased to 6.8% of total applications.
• The FHA share of total applications increased to 12.7% from 12.5% the week prior. 
• The VA share of total applications decreased to 12.1% from 12.5% the week prior. 
• The USDA share of total applications remained unchanged at 0.5% from the week prior.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.91% from 6.69%, with points increasing to 0.83 from 0.66 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.78% from 6.57%, with points increasing to 0.76 from 0.57 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.85% from 6.56%, with points increasing to 1.26 from 1.24 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year fixed-rate mortgages increased to 6.41% from 6.15%, with points increasing to 0.84 from 0.72 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs decreased to 5.39% from 5.73%, with points decreasing to 0.46 from 1.19 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

MBA’s take:
“Inflation is still running too high, and recent economic data is beginning to convince investors that the Federal Reserve will not be cutting rates anytime soon. Mortgage rates for conforming 30-year loans were being quoted above 7 percent by some lenders last week, and the weekly average at 6.9 percent reached the highest level since last November,” said Mike Fratantoni, MBA’s SVP and chief economist. “Application volumes for both purchase and refinance loans decreased last week due to these higher rates. While refinance demand is almost entirely driven by the level of rates, purchase volume continues to be constrained by the lack of homes on the market.”