Mortgage Applications Decrease in Latest MBA Weekly Survey

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Mortgage applications decreased 13.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 17, 2023. 

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week and was 72 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 18 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 41 percent lower than the same week one year ago.

“Mortgage rates increased across all loan types last week, with the 30-year fixed rate jumping 23 basis points to 6.62 percent – the highest rate since November 2022. The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This time of the year is typically when purchase activity ramps up, but over the past two weeks, rates have increased significantly as financial markets digest data on inflation cooling at a slower pace than expected. The increase in mortgages rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates.”

Added Kan, “Refinance applications declined last week and remained more than 70 percent behind last year’s pace. Given that rates are over 2.5 percentage points higher than a year ago, we expect that refinance activity will remain depressed for some time.” 

The refinance share of mortgage activity increased to 32.5 percent of total applications from 32.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.6 percent of total applications.

The FHA share of total applications decreased to 12.1 percent from 12.6 percent the week prior. The VA share of total applications decreased to 12.0 percent from 12.6 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) increased to 6.62 percent from 6.39 percent, with points increasing to 0.75 from0.70 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200)increased to 6.44 percent from 6.26 percent, with points increasing to 0.53 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.39 percent from 6.25 percent, with points increasing to 1.16 from 1.14 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.98 percent from 5.85 percent, with points increasing to 0.93 from 0.81 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.66 percent from 5.53 percent, with points increasing to 0.97 from 0.72 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.