Mortgage application volumes came in flat last week
The MBA's Market Composite Index, a measure of weekly loan application activity based on surveys of the trade group's members, still managed to inch up a seasonally adjusted 0.5% from seven days earlier,
Numbers increased, as the conforming average for the 30-year fixed-rate mortgage with balances below the conforming amount of $726,200 dropped 4 basis points to 6.73% from 6.77% the prior week. Points for 80% loan-to-value ratio loans slid down to 0.64 from 0.65.
"The 30-year fixed mortgage rate declined for the third consecutive week," said Joel Kan, MBA's vice president and deputy chief economist, in a press release. While other fixed averages headed in different directions, movements overall were less dramatic compared to the past month
The 30-year jumbo average for loans above the conforming amount edged up to 6.8% from 6.79% seven days earlier. Points also declined by a single basis point to 0.49 from 0.5.
It was the second straight week the jumbo rate came in above the conforming average. "Tighter liquidity conditions have prompted jumbo lenders to pull back, increasing rates in the process," Kan said. He pointed out that the last time jumbo rates were higher was in December 2021.
Largely a bank product,
Home buying activity, overall, saw a pick-up, with the MBA's seasonally adjusted Purchase Index increasing 1.5% week-over-week. Conventional and Federal Housing Administration loan activity both climbed higher, but other government-backed mortgage application numbers dropped.
"First-time homebuyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory," according to Kan.
Limited supply is also keeping prices elevated. That has been reflected in weekly average purchase amounts on applications, which have consistently remained above $400,000 for most of 2023. After dropping to its lowest point in over four months in the prior survey, the mean size headed back up again by 0.8% to $428,400 from $425,100.
Meanwhile, average refinance sizes shrank 0.9% to $260,700 from $263,200 one week earlier. The average across all new applications rose to $383,200, up 0.6% from $380,900.
The Refinance Index countered the weekly gain in purchases, dropping 2.1% versus the previous week. The latest refinance numbers clocked in 40.4% below levels of a year ago, with current rates offering little incentive to most borrowers.
The refinance share relative to total activity last week also decreased to 26.9% from 27.3% as a result. Meanwhile, the adjustable-rate mortgage slice of activity fell to 6.3% from 6.5%.
Although FHA-backed activity came in higher, other federally sponsored loan types declined, leading to a shrinking percentage of government volume compared to the last survey.
While FHA-backed loans grew to a 13.3% share from 13%, applications guaranteed by the Department of Veterans Affairs saw their portion slip to 11.9% from 12.6% week-over-week. The sliver of mortgages coming through U.S. Department of Agriculture programs edged down to 0.4% from 0.5%.
Meanwhile, other fixed rates reported by MBA lenders showed muted weekly movements following the Fed's announcement, with industry averages rising or falling by 4 basis points at most.
The contract average of the 30-year FHA-backed home loan increased to 6.74% from 6.7% seven days earlier, while points used decreased to 1.03 from 1.14.
The 15-year fixed-rate mortgage inched up to an average of 6.26% compared to 6.25% in the prior survey period. Points for 80% LTV loans fell to 0.71 from 1.05.
Adjustable-rate loans told a different story, though, with the 5/1 ARM average jumping 19 basis points to 6.09% from 5.9% a week earlier. Points increased to 1.4 from 1.17. These loans stay fixed for a five-year term before adjusting to market levels.
