Despite the first decline in mortgage rates in nearly a month, mortgage applications declined last week after increasing in six of the previous seven weeks, the Mortgage Bankers Association said Wednesday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2% on a seasonally adjusted basis from the previous week, according to data from the MBA’s Weekly Mortgage Applications Survey for the week ended April 28.
On an unadjusted basis, the index decreased 0.4% from the previous week.
The seasonally adjusted Purchase Index decreased 2% from a week earlier. Unadjusted, it decreased 1% from the previous week and was 32% lower than a year earlier.
While the Purchase Index decreased, the Refinance Index increased 1% from the previous week. It was, however, 51% below the level at the same point last year.
Rates Declined
“Mortgage applications decreased last week, despite rates declining slightly for the first time in three weeks,” said Joel Kan, MBA’s vice president and deputy chief economist, who noted that the 30-year fixed mortgage rate fell 5 basis points to 6.5%, “which is still 114 basis points higher than a year ago. Elevated rates continue to both impact homebuyer affordability and weaken demand for refinancing.”
Kan said home purchase activity has been “very sensitive to rates and local market trends, including the very low supply of existing-home inventory. However, newly constructed homes account for a growing share of inventory, giving more options for prospective buyers.”
According to estimates released jointly last week by the U.S. Census Bureau and the Department of Housing and Urban Development, new single-family homes sold at an annual rate of 683,000 in March, nearly 10% above the downwardly revised February rate. The estimated rate was the highest since March 2022.
Kan added that the spread between jumbo loan rates and conforming loan rates "continues to narrow, an indication that there is reduced lender appetite for jumbo loans following the recent turmoil in the banking sector and heightened concerns about liquidity." The spread was 13 basis points last week, after being as wide as 64 basis points in November 2022, he said.
The refinance share of mortgage activity increased to 27.2% of total applications from 26.8% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.3% of total applications, the MBA said.
The FHA share of total applications slipped to 12.5% from 12.6% a week earlier, while the VA share of total applications ticked up to 11.3% from 11.2% from the previous week. The USDA share of total applications also inched up, rising to 0.5% from 0.4% a week earlier.
Mortgage Rates
Note: The points listed include the origination fee and are for 80% loan-to-value (LTV) ratio loans.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.5% from 6.55%, with points unchanged at 0.63. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.37% from 6.4%, with points increasing to 0.54 from 0.5. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.43% from 6.41%, with points decreasing to 1.02 from 1.04. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.01 percent from 6.03%, with points decreasing to 0.55 from 0.56. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs increased to 5.48% from 5.47%, with points decreasing to 1.14 from 1.18. The effective rate remained unchanged from last week.
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.
