Mortgage applications decreased this week but economists say homebuying sentiment has improved over this time last year thanks to an increase in homes on the market.
According to the latest Market Composite Index from the Mortgage Bankers Association (MBA)—its measure of mortgage loan activity volume and includes purchases and refinances—decreased 1.6% on a seasonally adjusted basis from last week’s 7.9% increase, for the week ending April 24. On an unadjusted basis, the Index decreased 1% compared with the previous week.
“Mortgage rates increased slightly last week, with the 30-year fixed rate rising to 6.37 percent,” said MBA Senior Vice President and Chief Economist Mike Fratantoni. “The increase in rates led to a 4 percent decline in refinance application volume. However, purchase activity for conventional loans picked up almost 2 percent for the week.”
Fratantoni said more notably, purchase application activity was more than 20 percent above last year’s pace.
“After a brief pause, in part because of the elevated geopolitical uncertainties, potential homebuyers certainly appear to be moving forward this spring and taking advantage of the more favorable inventory conditions in most parts of the country,” he said.
The refinance application volume decreased by 4%, while purchase application volume increased 1% and was up 21% compared to last year’s pace, MBA data showed.
The refinance share of mortgage activity decreased to 42.5% of total applications from 44.2% the previous week. The adjustable-rate mortgage (ARM) share of activity increased this week, up to 8.3% of total applications.
MBA also reported that the FHA share of total applications decreased to 17.2% from 18.2% the previous week. The VA share of total applications remained unchanged at 15.0% from the week prior and the USDA share of total applications also remained unchanged at 0.5% from the week prior.
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