Mortgage applications have taken a hit, experiencing a 4.2% dip from the previous week, according to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey. The survey, which concluded on Aug. 18, 2023, showed significant drops across various mortgage segments.
The Market Composite Index, a key barometer of mortgage loan application volumes, fell 4.2% on a seasonally adjusted scale, with a steeper drop of 6% on an unadjusted scale over the last week. The Refinance Index similarly saw a 3% decrease from the past week and was notably 35% lower than figures from the same week the previous year.
The Purchase Index, a measure of home buying intent, recorded a 5% decrease from the previous week when adjusted seasonally. On an unadjusted scale, the decrease was more pronounced at 7%, making it 30% lower year over year.
MBA’s Deputy Chief Economist Joel Kan attributed the downturn to surging Treasury yields. "This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31% – the highest level since December 2000,” he said.
Kan further noted that applications for home purchase mortgages plummeted to their lowest since April 1995, with potential homebuyers balking at the elevated interest rates and diminished purchasing power. "Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing," he said.
Kan also shed light on the recent uptick in adjustable-rate mortgage (ARM) applications, which now account for 7.6% of the total applications, marking a five-month high. “The ARM share of applications increased to 7.6%, the highest level in five months, and the number of ARM applications picked up by 4% last week. Some homebuyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period," he added.
Other notable findings from the report include:
- The refinance share of total mortgage applications saw a modest increase to 29.5%, up from 28.6% the previous week.
- The FHA share of applications rose to 14.3%, marking an increase from the previous week’s 13.8%.
- The VA share slightly declined to 11.6% from 11.8%.
- The USDA applications increased from 0.4% to 0.5%.
Interest rates across various loan categories experienced increases, with the 30-year fixed-rate mortgages observing a surge in conforming and jumbo loan balances. Rates for mortgages backed by the FHA and the 15-year fixed-rate mortgages also saw hikes, while the 5/1 ARM rates ascended to 6.50%.
