Mortgage applications dropped again by 5.6% from the previous week, according to the Mortgage Bankers Association.
The Market Composite Index, which serves as a measure of mortgage loan application volume, also saw a decrease of 5.6% on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the Index dropped by 3% compared to the prior week. Specifically, the Refinance Index fell by 7% from the previous week and was 1% lower compared to the same week one year ago. Meanwhile, the seasonally adjusted Purchase Index saw a 5% decrease from the previous week, with the unadjusted Purchase Index declining by 1% compared to the previous week and experiencing a 12% decrease compared to the same week last year.
“Mortgage rates were little changed last week, with the 30-year conforming rate declining slightly to 7.04 percent but remaining about a quarter percentage point higher than the start of the year,” MBA’s SVP and Chief Economist Mike Fratantoni said. “Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances. Purchase activity is running 12 percent behind last year’s pace, but our January Builder Application Survey results showed that applications to buy new homes were up 19 percent compared to last year. This disparity continues to highlight how the lack of existing inventory is the primary constraint to increases in purchase volume. However, mortgage rates above seven percent sure don’t help.”
The refinance share of mortgage activity decreased to 31.2% of total applications from 32.6% the previous week, while the adjustable-rate mortgage (ARM) share of activity increased to 7.5% of total applications.
In terms of government-backed loans, the FHA share of total applications decreased to 13.0% from 13.2% the previous week, and the VA share decreased to 11.7% from 12.1%. The USDA share of total applications remained unchanged at 0.5%.
Regarding interest rates, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.04%, while the average contract interest rate for jumbo loan balances (greater than $766,550) increased to 7.2%. For 30-year fixed-rate mortgages backed by the FHA, the average contract interest rate decreased to 6.86%.
Additionally, the average contract interest rate for 15-year fixed-rate mortgages increased to 6.7%, while the average contract interest rate for 5/1 ARMs decreased to 6.33%.
