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Mortgage Applications Increase 4th Time In 5 Weeks

David Krechevsky
Feb 07, 2023
mortgage application

MBA survey finds overall volume increased 7.4% from a week earlier.

  • Refinance Index rose 18%, but still down 75% year over year.
  • Refis made up nearly 34% of all applications, up from 31.2% a week earlier.
  • The 30-year fixed-rate mortgage fell for the fifth-straight week.

Mortgage applications increased for the fourth time in the first five weeks of the year, led by a surge in refinance activity, the Mortgage Bankers Association (MBA) said Wednesday.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Feb. 3, the Market Composite Index  a measure of mortgage loan application volume increased 7.4% on a seasonally adjusted basis from a week earlier. Unadjusted, the index increased 8% compared with the previous week. 

The Refinance Index increased 18% from the previous week, but was still 75% lower than the same week last year. 

The seasonally adjusted Purchase Index increased 3% from a week earlier. Unadjusted, the Purchase Index increased 4% from the previous week, but was 37% below where it was at the same point last year.

Lower Rates Help

“Applications rose last week as the 30-year fixed mortgage rate inched lower to 6.18%, its fifth-consecutive weekly decline,” said Joel Kan, the MBA’s vice president and deputy chief economist. “The 30-year fixed rate is almost a percentage point below its recent high of 7.16% in October 2022.”

Kan noted that both purchase and refinance applications increased last week, and have shown gains in three of the past four weeks because of lower mortgage rates. 

“Overall applications remained 58% lower than a year ago and rates are still significantly higher, however, this week’s results are a step in the right direction,” he said. “Purchase activity that was put on hold last year due to the quick runup in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market.”

Kan added that the average loan size on a purchase application increased to $428,500 the largest average since May 2022.

“This increase is a sign that the recent upward trend in purchase activity remains skewed toward larger loan sizes and less first-time homebuyer activity, as entry level housing remains undersupplied, and buyers struggle with affordability in many markets.”

According to the weekly survey, the refinance share of mortgage activity increased to 33.9% of total applications from 31.2% the previous week. 

The adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications.

The FHA share of total applications slipped to 11.9% from 12% the previous week. The VA share of total applications increased to 13.4% from 11.9% the previous week. The USDA share of total applications, meanwhile, has remained unchanged since the start of the year at 0.6%. 

Mortgage Rates

Note: The points listed include the origination fee and are for 80% loan-to-value ratio loans.

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) dipped to 6.18% from 6.19%, with points decreasing to 0.64 from 0.65. 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 5.96% from 5.99%, with points increasing to 0.55 from 0.48. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.14% from 6.18% with points decreasing to 0.88 from 0.99. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 5.64% from 5.5%, with points decreasing to 0.63 from 0.73. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 5.56% from 5.38%, with points decreasing to 0.80 from 0.83. The effective rate increased 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.

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