Mortgage application volumes
The MBA's Market Composite Index, a measure of weekly loan-application volumes based on surveys of the trade group's members, increased a seasonally adjusted 6.3% after coming in lower by 1.2% seven days earlier. On a year-over-year basis, activity finished 36.5% under 2022's level.
"Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
Mortgage rates fell across all categories among MBA lenders, with the most commonly used 30-year contract average for conforming loans with balances below $726,200 edging down 2 basis points to 6.48% from 6.5% the previous week. Points for conforming 80% loan-to-value ratio loans also decreased to 0.61 from 0.63.
The 30-year jumbo mortgage average for balances above the conforming amount saw a slightly larger drop to 6.33% from 6.37%, while points decreased to 0.51 from 0.54.
Both purchases and refinances contributed to the week's surge. The Refinance Index experienced a notable uptick, with new applications growing at its most rapid seven-day pace since January.
"Refinance activity jumped 10% to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels," Kan said. In comparison to the same week in 2022, weekly refinance volumes were still lower by 44.5%. But thanks to the elevated activity, refinances grabbed a larger 28% share of overall volume, increasing from 27.2% during the previous survey period.
The seasonally adjusted Purchase Index, meanwhile, increased 4.8% on a weekly basis, but application numbers still stand 32% year over year. "Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many home buyers," according to Kan.
Scarce housing supply has kept prices from falling significantly, reflected in the average purchase-loan sizes seen in 2023. While the mean purchase amount remained virtually the same compared to the previous survey, slipping by a small fraction to $440,700 from $441,100, it still sat more than 13% higher from its mark to start the year.
The average refinance size, though, headed in the opposite direction, rising 4.4% to $277,900 from $266,200. The overall average, inclusive of all new mortgage applications, inched up 0.4% to $395,000 from $393,600.
Federally backed loan applications played a big part in lifting weekly volume, particularly refinances, which surged 23.7%. The Government Index outpaced overall activity, leaping 11.9% on a seasonally adjusted basis.
The share of federally guaranteed mortgage applications relative to overall volume, likewise, took a jump primarily thanks to new VA loans.
Shares of other government loans took a step down, though, with the portion of Federal Housing Administration-sponsored applications dropping to a 12.1% slice from 12.5%, while U.S. Department of Agriculture-backed mortgages decreased to 0.4% from 0.5%.
The contract average interest rate for 30-year FHA-backed loans, meanwhile, dropped to 6.41% from 6.43% the prior week, with points used on the mortgages edging down to 1.01 from 1.02.
The 15-year average took a steeper dive compared to other fixed loans, falling 10 basis points to finish under the 6% threshold. The rate finished at 5.91% compared to 6.01% in the prior survey. Points for 80% LTV loans increased to 0.58 from 0.55.
The hybrid 5/1 adjustable-rate mortgage average dropped 13 basis points to 5.35% from 5.48%, with points decreasing to 0.79 from 1.14. Interest in the loans, which stay at a fixed rate for the first five years before adjusting to market values, generally move in the same direction as fixed rates. The trend held true last week, with ARM shrinking to 6.8% from 7.3% in the prior survey.
