Home lending activity reversed course last week, while purchase amounts maintained their steady growth to start 2023, according to the latest data from the Mortgage Bankers Association.
The MBA's Market Composite Index, a measure of weekly application volume based on surveys of association members, surged a seasonally adjusted 7.4% for the period ending Feb. 3. The increase came
"This week's results are a step in the right direction," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
"Purchase activity that was put on hold last year due to the quick runup in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market."
Both refinance and purchase volumes increased for the third time in four weeks thanks to lower interest rates, now almost one percentage rate lower than the 7.16% average reported by MBA members in October, Kan said.
The Refinance Index surged 18% from seven days earlier, but with rates still exceeding their marks of early 2022 by a substantial margin, activity remains 75% lower on an annual basis. Meanwhile, the refinance share relative to total applications also increased to 33.9%, up from 31.2% week over week.
The seasonally adjusted Purchase Index climbed up 3% from the previous week but came in 33% lower from its mark of a year ago. The 2023 uptick in purchases coincides with recent research showing
"The average loan size on a purchase application increased to $428,500 — the largest average since May 2022," Kan said. "This increase is a sign that the recent upward trend in purchase activity remains skewed toward larger loan sizes and less first-time home buyer activity, as entry-level housing remains undersupplied."
Recent survey results from the National Association of Home Builders gave an indication of current obstacles some face, with
The week's average purchase amount reflected a 2.8% swing upward from the prior survey's level of $416,800, while the mean refinance size of new applications also surged 4.1% to $280,100 from $269,000. The overall average across all activity jumped 2% to $378,200 from $370,700 the previous week.
But even as loan amounts expanded, typically smaller government-sponsored mortgages managed to take a bigger share of overall volume. Loans guaranteed by the Federal Housing Administration made up 11.9% of activity, inching down from 12% the previous week. But applications backed by the Department of Veterans Affairs saw their share jump to 13.4% from 11.9%. Loan activity coming via the U.S. Department of Agriculture came in at 0.6% of total volume, unchanged from one week prior.
Meanwhile, 30-year fixed interest rates measured by the MBA all decreased from the previous seven-day period, with the conforming average falling for the fifth straight week. Rates for other terms headed upward, though.
The average for 30-year fixed mortgages under the conforming limit of $726,200 edged down by a basis point to 6.18% from 6.19%. Points, likewise, decreased to 0.64 from 0.65 for 80% loan-to-value ratio loans.
Fixed-contract rates for 30-year jumbo mortgages above the conforming mark also dropped to an average of 5.96% from 5.99% a week earlier, with points increasing to 0.55 from 0.48.
The average contract interest rate for 30-year fixed FHA-backed loans slid down 4 basis points to 6.14% from 6.18%. Points decreased to 0.88 from 0.99.
The contract 15-year fixed-rate average, however, jumped 14 basis points to 5.64% from 5.5% a week earlier. Points decreased to 0.63 from 0.73.
The average contract interest rate for 5/1 adjustable-rate mortgage surged to 5.56% after coming in at 5.38% the previous week, with points decreasing to 0.80 from 0.83 for 80% LTV loans. ARM volume relative to overall activity also took a similar share compared to the prior reporting period, inching down to 6.6% from 6.7%.
