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Mortgage Applications Post Nearly 30% Gain

David Krechevsky
Jan 17, 2023
There was a mild uptick in mortgage applications activity, according to new data from the Mortgage Bankers Association (MBA) covering the week ending Feb. 2

Both purchase and refi applications spike as mortgage rates fell in second week of 2023.

KEY TAKEAWAYS
  • The MBA's Market Composite Index increased 27.9% on a seasonally adjusted basis from a week earlier.
  • The Refinance Index increased 34% from the previous week, but was still 81% below the level from the same week last year. 
  • Seasonally adjusted, the Purchase Index increased 25% from a week earlier.
  • Mortgage rates are now at their lowest level since September 2022.

With mortgage rates falling to their lowest level in three months, mortgage applications surged last week by nearly 30%, the Mortgage Bankers Association (MBA) said Wednesday. Both purchase and refinance applications increased dramatically.

According to data from the MBA’s Weekly Mortgage Applications Survey for the week ended Jan. 13, the Market Composite Index — a measure of mortgage loan application volume — increased 27.9% on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the index increased 32% compared with the previous week. 

The Refinance Index increased 34% from the previous week, but was still 81% below the level from the same week last year. 

Seasonally adjusted, the Purchase Index increased 25% from a week earlier. Unadjusted, the Purchase Index increased 32% from the previous week but was 35% lower than the same week last year.

The dramatic increases followed a smaller, 1.2% increase in the composite index the previous week after applications had fallen 13% in the final two weeks of 2022.

Room For Optimism

Mike Fratantoni, MBA senior vice president and chief economist, cautioned about reading too much into the big increases.

“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” he said. “Despite these gains, refinance activity remains more than 80% below last year’s pace and purchase volume remains 35% below year-ago levels.”

Still, there is some room for optimism, he said.

“Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall,” Fratantoni said. “As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”

The refinance share of mortgage activity increased to 31.2% of total applications from 30.7% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications.

The FHA share of total applications decreased to 13% from 13.4% the previous week. The VA share of total applications decreased to 11.8% from 13.2% the week prior. The USDA share of total applications remained unchanged from the previous week at 0.6%.

Mortgage Rates

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.23% from 6.42%, with points decreasing to 0.67 from 0.73 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 6.08% from 6.09%, with points decreasing to 0.4 from 0.66 (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 decreased to 6.26% from 6.39%, with points increasing to 1.05 from 1.03 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.58% from 5.94%, with points decreasing to 0.54 from 0.62 (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 5.31% from 5.37%, with points increasing to 0.74 from 0.72 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

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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