Mortgage activity slowed last week, as higher interest rates left buyers sidelined, according to the Mortgage Bankers Association.
The MBA's seasonally adjusted Market Composite Index, a weekly measure of loan application volumes based on surveys of association members fell 5.7% from
"Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping 9 basis points to its highest level in two months at 6.57%," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
One week prior, the average 30-year conforming rate came in at 6.48%. Meanwhile, points used for the 30-year conforming mortgage with balances below $726,200 remained at 0.61 for 80% loan-to-value transactions.
The average contract rate of the 30-year jumbo mortgage with balances exceeding the conforming amount also headed up 13 basis points, rising to 6.46% from 6.33% seven days earlier. Points decreased to 0.38 from 0.51 for 80% LTV loans.
"Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points," he said. A wider spread may point to broad concerns among investors regarding future volatility, possibly related to a
Kan recently pointed out the highly rate-sensitive nature of mortgage borrowers today, particularly among consumers looking to purchase. Rate increases helped drive the Purchase Index down 4.8% on a seasonally adjusted basis from the last survey to its lowest level in a month, Kan said. Compared to the same week in 2022, purchases came in 26.5% lower.
"Buyers remain wary of this rate volatility," he said, but also added that "for-sale inventory in many parts of the country remains scarce," leaving them with fewer purchase opportunities.
The Refinance Index, meanwhile, fell even more sharply, coming in 7.7% lower week over week. Volumes declined 43.4% from the same seven-day period a year ago, when interest rates were still well under 6%.
"Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate sensitive," Kan said.
Refinances accounted for 27.4% of total volume, slipping from 28% a week earlier. Adjustable-rate mortgages, which typically see greater uptake as rates head higher, bucked the trend, with a 6.5% share compared to 6.8% in the prior weekly survey.
As refinance activity shrunk, so did the average amount reported on new applications. The mean size of refinances fell almost 6% to $261,300 from $277,900. But the average purchase-loan amount was virtually unchanged, coming in at $440,400 compared to $440,700 the previous week.
Across all applications, the average amount applied for was $391,300, a 0.9% decrease from one week earlier.
Federally backed loans took a larger step back than the composite market, with the seasonally adjusted Government Index falling by 8.9% from the previous survey period. The share of government-sponsored activity, likewise, dipped relative to overall activity.
While
FHA-backed mortgages saw the only decrease in home loan rates tracked by the MBA. The average contract rate inched down 2 basis points to 6.39% from 6.41% a week earlier among MBA lenders. Points used by borrowers also decreased to an average of 0.97 from 1.01 for 80% loan-to-value ratio loans.
The average 15-year contract rate managed to stay under the 6% mark, but still rose 5 basis points from the prior survey to 5.96% from 5.91%. Points increased to 0.68 from 0.58.
Meanwhile, the 5/1 ARM saw its average rate leap 36 basis points to 5.71% from 5.35% seven days earlier. Borrowers drove points used up to 1.1 from 0.79. This particular type of adjustable-rate mortgage stays fixed for half a decade before becoming variable based on market conditions.
