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Mortgage Applications Fall For 2nd Straight Week

David Krechevsky
May 23, 2023
mortgage application

The MBA's Market Composite Index decreased 4.6% on a seasonally adjusted basis as mortgage rates rose again.

  • The Purchase Index fell 4%, while the Refinance Index fell 5% from a week earlier.
  • The 30-year, fixed mortgage rate increased to 6.69%, highest since March, MBA said.

Mortgage applications fell nearly 5% last week, as mortgage rates increased, the Mortgage Bankers Association said Wednesday.

The Market Composite Index  — a measure of overall mortgage loan application volume — decreased 4.6% on a seasonally adjusted basis from a week earlier, according to data from the MBA’s Weekly Mortgage Applications Survey for the week ended May 19. Unadjusted, the index decreased 5% from the previous week. 

The Refinance Index decreased 5% from the previous week and was 44% lower than the same week last year. The seasonally adjusted Purchase Index decreased 4% from a week earlier. Unadjusted, the Purchase Index decreased 5% from the previous week and was 30% lower than the same week last year.

“Mortgage applications declined almost 5% last week as borrowers remained sensitive to higher rates,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 30-year fixed rate increased to 6.69%, the highest level since March. Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications.”

Refinance activity also remains limited, he said, “with the refinance index falling to its lowest level in two months and more than 40% below last year’s pace.”

Uncertain Economic Outlook

Kan added that investors remain “attuned to the uncertainty around the U.S. debt ceiling and communication from several Federal Reserve officials last week, which sent Treasury yields higher, along with mortgage rates.”

He continued, “Economic data released over the past week have also pointed to a still-resilient economy. The housing market received positive data on new residential construction — which is seen as a key solution to the lack of housing inventory.”

Sales of new single-family homes rose 4.1% in April, the third straight monthly increase, reaching a level not seen since March 2022, the U.S. Census Bureau and Department of Housing and Urban Development said Tuesday.

The refinance share of mortgage activity remained unchanged at 27.4% of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.7% of total applications, the MBA said.

The FHA share of total applications increased to 12.5% from 12% the previous week. The VA share of total applications ticked up to 12.5% from 12.2% a week earlier. The USDA share of total applications inched up to 0.5%, from 0.4% the previous week.

Mortgage Rates

Note: The points listed include the origination fee and are for 80% loan-to-value (LTV) ratio loans. The effective rate for each mortgage increased from the previous week.

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.69% from 6.57%, with points increasing to 0.66 from 0.61.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.57% from 6.46%, with points increasing to 0.57 from 0.38.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.56% from 6.39%, with points increasing to 1.24 from 0.97.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 6.15% from 5.96%, with points increasing to 0.72 from 0.68.
  • The average contract interest rate for 5/1 ARMs increased to 5.73% from 5.71%, with points increasing to 1.19 from 1.1.

The 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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