Mortgage applications dipped 1.3% the week ending Sept. 22, 2023, according to the latest data from the Mortgage Bankers Association.
The Market Composite Index, which gauges the volume of mortgage loan applications, reported a seasonally adjusted decline of 1.3% from the previous week. When unadjusted, the decrease stood at 2%. Significantly, the Refinance Index dropped by 1% from the last week, marking a substantial 21% fall from the same week in the prior year.
The seasonally adjusted Purchase Index also saw a 2% downturn from the week before, with the unadjusted Purchase Index mirroring this decline. This was a sharp 27% drop compared to the same period in the preceding year.
“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week,” Joel Kan, MBA’s deputy chief economist, said. “The 30-year fixed mortgage rate increased to 7.41%, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34%, the highest rate in the history of the jumbo rate series dating back to 2011.”
He said based on the recent projections from the Federal Reserve’s Open Market Committee, “rates are expected to be higher for longer.”
“Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates,” Kan said. “The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27% behind last year’s pace. Refinance activity was down over 20% from last year and accounted for approximately one-third of applications.”
He said there is scant motivation for homeowners to refinance at this point.
Other notable data points from the survey include:
- The refinance share of mortgage activity inched up slightly to 31.9%.
- The adjustable-rate mortgage (ARM) activity share rose to 7.5%.
- FHA applications constituted 14.1%, a marginal dip from the preceding week's 14.2%.
- VA applications formed 10.9%, a slight decrease from the prior week's 11 %.
- USDA applications saw a slight uptick to 0.5%.
