Mortgage Applications Increase in Latest MBA Weekly Survey

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Falen Taylor

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Mortgage applications increased 7.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 20, 2023.  This week’s results include an adjustment for the observance of Martin Luther King, Jr. Day.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week.  The Refinance Index increased 15 percent from the previous week and was 77 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 39 percent lower than the same week one year ago.

“Mortgage rates declined for the third straight week, which is good news for potential homebuyers looking ahead to the spring homebuying season. Mortgage rates on most loan types decreased last week and the 30-year fixed rate reached its lowest level since September 2022 at 6.2 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications increased with both gains in purchase and refinance activity, but purchase applications remained almost 39 percent lower than a year ago. Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market. Many have been waiting for affordability challenges to subside.”

Added Kan, “Despite a 15 percent increase in refinances, they were still 77 percent behind last year’s pace, as rates remained more than two percentage points higher, thus providing very little refinance incentive for most borrowers who are locked into lower rates.”

The refinance share of mortgage activity increased to 31.9 percent of total applications from 31.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications decreased to 11.9 percent from 13.0 percent the week prior. The VA share of total applications increased to 13.0 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.20 percent from 6.23 percent, with points increasing to 0.69 from0.67 (including the origination fee) for 80 percent 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)decreased to 5.92 percent from 6.08 percent, with points increasing to 0.41 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.22 percent from 6.26 percent, with points increasing to 1.10 from 1.05 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.54 percent from 5.58 percent, with points decreasing to 0.51 from 0.54 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.44 percent from 5.31 percent, with points increasing to 0.83 from 0.74 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.