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MBA: Mortgage Applications Rebound After Year-End Drop 

David Krechevsky
Jan 10, 2023
mortgage application

After falling 13% at years end, applications rise 1.2% in first week of 2023.

KEY TAKEAWAYS
  • The Market Composite Index, a measure of overall mortgage loan application volume, increased 1.2%.
  • The Refinance Index increased 5% from the previous week.
  • The seasonally adjusted Purchase Index, meanwhile, decreased 1% from a week earlier.

After falling more than 13% over the final two weeks of last year, mortgage applications rebounded in the first week of January, the Mortgage Bankers Association (MBA) said Wednesday.

The Market Composite Index, a measure of overall mortgage loan application volume, increased 1.2% on a seasonally adjusted basis, according to the MBA’s Weekly Mortgage Applications Survey for the week ended Jan. 6, 2023.

Unadjusted, the Index increased 48% from the previous week, the survey showed.

The overall increase was led by the Refinance Index, which increased 5% from the previous week, though it was still 86% below the same week last year. 

The seasonally adjusted Purchase Index, meanwhile, decreased 1% from a week earlier. Unadjusted, the Purchase Index increased 47% from the previous week but was still 44% lower than the same week last year.

“Mortgage rates declined last week as markets reacted to data showing a weakening economy and slowing wage growth,” said Joel Kan, MBA’s vice president and deputy chief economist. “All loan types in the survey saw a decline in rates, with the 30-year fixed rate falling to 6.42%.”

Kan said purchase applications “continued to be hampered by broader weakness in the housing market and declined slightly over the week, with the index slipping to its lowest level since 2014.”

He also noted the increase in refinance activity, which he said was “a result of the 16-basis-point decline in rates, as both conventional and government refinance applications increased.”

However, he said, “the overall pace of refinance applications was lower than November and December’s 2022 averages, and over 80% lower than a year ago. Refinances were about 30% of all applications last week — well below the past decade’s average of 58%.”

The refinance share of mortgage activity increased to 30.7% of total applications from 30.3% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.3% of total applications.

The FHA share of total applications decreased to 13.4% from 14% the previous week. The VA share of total applications dipped to 13.2% from 13.4% the previous week. The USDA share of total applications remained unchanged at 0.6%.

Mortgage rates

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.42%% from 6.58%, with points remaining at 0.73 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 6.09% from 6.12%, with points increasing to 0.66 from 0.45 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. 
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.39% from 6.45%, with points decreasing to 1.03 from 1.24 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.94% from 6.06%, with points decreasing to 0.62 from 0.70 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 5.37% from 5.61%, with points increasing to 0.72 from 0.62 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

MBA’s survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks. and thrifts. Base period and value for all indexes is March 16, 1990=100.

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