Rising mortgage rates and ongoing market volatility resulted in a second week of purchase activity pullbacks, but activity is still up over this time last year.
According to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending May 23, the Market Composite Index (a measure of mortgage loan application volume) decreased 1.2% from the previous week’s 5.1% decrease. On an unadjusted basis, the Index decreased 2% compared with the previous week.
“Mortgage rates reached its highest level since January, following higher Treasury yields. Additional market volatility has added to the increase, keeping the mortgage-Treasury spread wider than it was earlier this year. The 30-year fixed rate increased to 6.98 percent, its third consecutive weekly increase,” said Joel Kan, MBA’s vice president and deputy chief economist. “As a result of these higher rates, applications activity decreased, driven by a 7 percent decline in refinance applications. Conventional refinances were down 6 percent, and VA refinances dropped 16 percent.”
MBA reported that the Refinance Index decreased 7% from the previous week and was 37% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index increased 2% compared with the previous week and was 18% higher than the same week one year ago.
The refinance share of mortgage activity decreased to 34.6% of total applications from 36.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.5% of total applications.
Kan said while volatility may be shaping the activity week to week, overall improvements to the inventory shortage in many markets is helping.
“Purchase applications were up over the week and continue to run ahead of last year’s pace as increased housing inventory in many markets has been supporting some transaction volume, despite the economic uncertainty,” Kan added.
