Mortgage applications declined 7.2% last week, according to the Mortgage Bankers Association. This decrease is primarily attributed to an adjustment made to account for the Martin Luther King Jr. holiday.
The Market Composite Index, which measures mortgage loan application volume, dropped by 7.2% on a seasonally adjusted basis compared to the previous week. However, on an unadjusted basis, the index increased by 8% compared to the previous week.
While the Refinance Index increased by 2% from the previous week and was 3% higher than the same week in the previous year, the seasonally adjusted Purchase Index saw a significant decline of 11% from one week earlier. The unadjusted Purchase Index did increase by 6% compared to the previous week, but it remained 20% lower than the same week in the previous year.
Mortgage rates remained relatively stable during the period, with the 30-year fixed rate at 6.78%. This rate is close to where it has been for the past month, but lower than the peak of 7.9% in October 2023.
“Applications decreased compared to a holiday-adjusted week, driven by a decline in purchase applications that offset a slight increase in refinance activity," MBA Vice President and Deputy Chief Economist Joel Kan, said. "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. The average loan size for purchase applications has picked up in recent weeks to $444,100, the largest average loan size since May 2022.”
The refinance share of mortgage activity increased to 34.2% of total applications from 32.7% the previous week. The adjustable-rate mortgage (ARM) share of activity also increased to 6.6% of total applications.
The FHA share of total applications decreased slightly to 13.8% from 14.1% the previous week. Similarly, the VA share of total applications decreased to 13.3% from 13.7% the week before, while the USDA share of total applications remained unchanged at 0.4%.
Despite fluctuations in various indices, the average contract interest rates for different mortgage types saw relatively stable figures, with minor changes in points and effective rates.
