Mortgage applications decreased 10.6% from the previous week, according to the Mortgage Bankers Association.
The Market Composite Index, which measures mortgage loan application volume, mirrored this decline, also dropping by 10.6% on a seasonally adjusted basis. On an unadjusted basis, the Index decreased by 8% compared to the previous week.
The Refinance Index, indicating applications for refinancing existing mortgages, experienced a 11% decrease from the previous week. However, it was slightly higher by 0.1% compared to the same week one year ago. Meanwhile, the seasonally adjusted Purchase Index, reflecting applications for new home purchases, declined by 10% from the previous week. On an unadjusted basis, the Purchase Index dropped by 6% compared to the prior week and showed a substantial 13% decrease from the same week one year ago.
MBA’s Senior Vice President and Chief Economist Mike Fratantoni attributed this drop in mortgage applications to a rise in mortgage rates, which climbed back above 7%.
“Mortgage applications dropped as a result with a larger decline in refinance applications. Potential homebuyers are quite sensitive to these rate changes, as affordability is strained with both higher rates and higher home values in this supply-constrained market," Fratantoni said.
Furthermore, the refinance share of mortgage activity decreased to 32.6% of total applications from 34% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity increased to 7.4% of total applications.
Regarding government-backed loans, the FHA share of total applications decreased to 13.2% from 13.5% the week prior, and the VA share decreased to 12.1% from 13.3%. However, the USDA share of total applications increased slightly to 0.5% from 0.4%.
Interest rates also saw an uptick, with the average contract interest rate for 30-year fixed-rate mortgages increasing to 7.06% from 6.87% for conforming loan balances. Similarly, rates for jumbo loan balances and FHA-backed mortgages also experienced increases.
These shifts in mortgage rates and application volumes signal ongoing fluctuations in the housing market, affecting both prospective buyers and homeowners looking to refinance.
