In the-real-estate-market-that-could, home-purchase applications ticked up this past week as increased inventory in many markets seems to be buoying transaction volume, despite weekly ups and downs in activity and rates sustained at elevated levels.
The latest Market Composite Index from the Mortgage Bankers Association (MBA)—its measure of mortgage loan activity volume and includes purchases and refinances—shows mortgage application activity increasing 0.8% on a seasonally adjusted basis after last week’s 1% decrease. On an unadjusted basis, the Index decreased 1% compared with the previous week.
The increase comes as the average 30-year mortgage rate held steady at 6.66% last week, a seemingly acceptable level to move some buyers off the sidelines. The average 30-year fixed mortgage rate has jumped up to 6.91% as of this writing, likely cooling activity again when we look back next week, in what seems to be weekly ups and downs in both the purchase and refinance segments.
“Mortgage rates reached their highest levels in four weeks as investors’ concerns about inflation and growing deficits push yields higher across the globe,” said Mike Fratantoni, MBA’s SVP and chief economist. “Refinance volume dropped in response, but purchase volume increased modestly over the week and was slightly below last year’s level.”
He added, “In many local markets, potential buyers have plenty of homes to choose, and this is likely supporting transaction volume.”
MBA’s Refinance Index saw a 1% decrease from a 2% decrease the previous week and was 19% lower than the same week one year ago. MBA’s seasonally adjusted Purchase Index–its weekly measurement of nationwide home loan applications based on a sample of about 75% of U.S. mortgage activity–increased 2% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 0.2% lower than the same week one year ago, according to the report.
The refinance share of mortgage activity decreased to 41.8% from 42.0% the previous week, MBA reported. The adjustable-rate mortgage (ARM) share of activity increased to 8.0% of total applications, a trend MBA is keeping an eye on, Fratantoni noted.
“Another trend we’re monitoring is more borrowers choosing ARMs, with the ARM share back to 8 percent last week, its highest level in 5 weeks,” he said.
For government-backed loans, this week’s report showed the FHA share of total applications decreased to 15.9% from 16.2%the week prior. The VA share of total applications increased to 13.6% from 12.8% the week prior, and the USDA share of total applications remained unchanged at 0.5% from the week prior.
To view the full report, click here.
