With mortgage rates climbing to their highest point since August recently, the role of steadily increasing home purchase application and refinance activity has reversed, with both indexes by the Mortgage Bankers Association (MBA) showing sharp decreases this week.
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 10.4% on a seasonally adjusted basis from last week’s 10.5% decrease, for the week ending March 27. On an unadjusted basis, the Index decreased 10% compared with the previous week.
“The 30-year mortgage rate, now at 6.57 percent, reached its highest level since last August and is up half a percentage point from just one month ago,” said Mike Fratantoni, MBA’s SVP and chief economist. “Refinance application volumes declined sharply again last week, dropping 17 percent, and are down more than 40 percent compared to last month.
“Seasonally adjusted purchase application volume also declined over the week, but only by 3 percent,” Fratantoni noted. “The headwinds of higher rates are being offset somewhat by the buyer’s market in many parts of the country–there are more homes for sale than buyers have seen in some time.
MBA’s Refinance Index decreased 17% from the previous week and was 33% higher 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 1% higher than the same week one year ago.
Data shows the refinance share of mortgage activity decreased to 45.3% of total applications from 49.6% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.0% of total applications.
Government-backed loan activity saw little change in total applications with only slight declines or increases, MBA reported.
The FHA share of total applications decreased to 19.5% from 19.7% the week prior. The VA share of total applications increased to 16.1% from 15.9% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.
“Purchase applications for FHA and VA loans continue to hold up better than those for conventional buyers,” Fratantoni said. “However, the shocks of the jump in rates and the increase in overall economic uncertainty are likely having an impact on buyer confidence.”
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