New loan application activity decreased for the first time this year, as declining purchases offset an uptick in refinances, according to the Mortgage Bankers Association.
The MBA's Market Composite Index, a measure of application volumes based on surveys of the trade group's members, fell a seasonally adjusted 7.2% from the previous seven-day period. The drop comes after four straight weeks of increases,
With mortgage rates flat last week, home buyers largely remained on the sidelines to drive the index down, according to Joel Kan, MBA vice president and deputy chief economist. The average contract rate of the 30-year fixed mortgage with balances below conforming amounts stayed at 6.78% week over week. But borrower points used to pay down the rate inched up to an average of 0.65 from 0.63 for 80% loan-to-value ratio mortgages.
"Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity," Kan said in a press release.
The seasonally adjusted Purchase Index took a fall of 11.4% from seven days earlier. Volumes also came in 18.8% lower on an annual basis.
But in spite of the latest weekly slowdown, the late 2023 pullback in interest rates has helped spur interest in home buying, as borrowers
Rising demand is also pushing prices upward for the supply available, though. The average purchase-loan size last week grew 4.3% to $444,100 — its highest mark since last May — compared with $425,100 in the previous survey. But industry stakeholders have said they expect origination trends to improve
The MBA's Refinance Index, meanwhile, headed in the other direction with a 1.6% increase from seven days earlier. Year over year, refinances climbed up 3% higher. Refinances also accounted for a 34.2% share relative to total activity, rising from 32.7% the previous week.
Shares of federally sponsored applications shrank, though, with the Government Index slowing more than conventional activity. Loans backed by the Federal Housing Administration decreased to 13.8% of volume from 14.1% a week earlier. The slice of applications coming through the Department of Veterans Affairs similarly pulled back to 13.3% from 13.7% week over week, while mortgages guaranteed by the U.S. Department of Agriculture took the same 0.4% share.
Just as the conforming rate flatlined, the average 30-year rate for fixed jumbo mortgages similarly stayed at the prior week's level of 6.94%. Points inched down to 0.45 from 0.46 for 80% LTV loans.
The average rate of the 30-year fixed contract FHA loan jumped 10 basis points to 6.61% from 6.51%. Borrowers typically used 0.79 in points, decreasing from 0.87 in the prior survey period.
The 15-year fixed-contract average came in at 6.34%, edging up from 6.31% one week prior. Points also fell to 0.53 from 0.59.
The average for the 5/1 adjustable-rate mortgage inched up by a single basis point to 6.23% from 6.22% seven days earlier. Points used to buy down the rate rose to 0.59 from 0.49 for the loans, which start out fixed for a five-year period.
At the same time, the share of adjustable-rate mortgage applications grew to 6.6% of activity from 6.3% in the previous weekly survey.
