Mortgage applications increased 6.5% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 10, 2023.
Joel Kan, MBA’s vice president and deputy chief economist, said demand may have been driven by a late-week drop in Treasury yields. The 10-year treasury yield is down 7.3% in the last five days, as of the close of trading on Tuesday.
“Treasury yields declined late last week, as market concerns over bank closures and the potential for broader ripple effects triggered a flight to safety in Treasury bonds. This decline pushed mortgage rates for all loan types lower, with the 30-year fixed rate decreasing to 6.71%,” said Kan. “Home-purchase applications increased for the second straight week but remained almost 40% below last year’s pace. While lower rates should buoy housing demand, the financial market volatility may cause buyers to pause their decisions.”
That market volatility should continue. Industry experts are divided on how the Federal Open Market Committee will act when it meets next week.
The Market Composite Index, a measure of mortgage loan application volume, increased 6.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 7% compared with the previous week. The seasonally adjusted Purchase Index increased by 7% from one week earlier. The unadjusted Purchase Index increased 8% compared with the previous week and was 38% lower than the same week one year ago.
The Refinance Index showed a bump with an increase of 5% from the previous week but is lower 74% lower than the same week one year ago. Added Kan, “Refinance activity remained more than 70% behind last year’s level, as rates are still more than two percentage points higher than a year ago. The dip in rates did bring some borrowers back as evidenced by the 5% increase in refinance applications last week.”
The refinance share of mortgage activity decreased to 28.2% of total applications from 28.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.5% of total applications.
The FHA share of total applications increased to 12.9% from 12.8% the week prior. The VA share of total applications decreased to 11.9% from 12.0% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.71% from 6.79%, with points decreasing to 0.79 from 0.80 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. 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 6.39% from 6.49%, with points increasing to 0.61 from 0.59 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.58% from 6.56%, with points decreasing to 1.20 from 1.21 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.14% from 6.25%, with points decreasing to 0.77 from 1.01 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 5.69% from 5.75%, with points decreasing to 0.87 from 0.95 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
