Mortgage Applications Decrease This Week

After two weeks of increases, mortgage applications saw a decrease this week, following sustained higher mortgage rates last week–dropping 1.8% from an increase of 1.1% the previous week. This is according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending July 21, 2023.

This week’s numbers: 

• The Market Composite Index, a measure of mortgage loan application volume, decreased 1.8% on a seasonally adjusted basis from one week earlier. 
• On an unadjusted basis, the Index decreased 1.5% compared with the previous week. 
• The Refinance Index decreased 0.4% from the previous week and was 30% lower than the same week one year ago. 
• The seasonally adjusted Purchase Index decreased 3% from one week earlier. 
• The unadjusted Purchase Index decreased 2% compared with the previous week and was 23% lower than the same week one year ago.
• The refinance share of mortgage activity increased to 28.7% of total applications from 28.4% the previous week. 
• The adjustable-rate mortgage (ARM) share of activity decreased to 5.9% of total applications.
• The FHA share of total applications decreased to 12.7% from 13.6% the week prior. 
• The VA share of total applications remained unchanged at 12.1% from 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) remained unchanged at 6.87%, with points decreasing to 0.65 from 0.66 (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) increased to 6.90% from 6.89%, with points remaining at 0.64 (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 6.80% from 6.77%, with points decreasing to 1.03 from 1.12 (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 6.37% from 6.36%, with points increasing to 0.75 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 6.01% from 6.27%, with points increasing to 1.25 from 0.91 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

MBA’s take:

“Mortgage rates were essentially flat last week but remained high, with the 30-year fixed rate staying at 6.87% and contributing to a pullback in mortgage applications,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 2.5% decline in purchase activity, partly driven by a 10% decrease in FHA applications, pushed the purchase index to its lowest level in over a month. The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May. Refinance applications remained lackluster, running 30% behind year-ago levels. Many borrowers remain on the sidelines given current rates and persistent affordability challenges.”