Purchase Activity Offsets Refi Decline In Mortgage Apps

Mortgage applications increased 0.2% from the previous week according to the MBA's Market Composite Index. The Refinance Index, however, saw a 1% decline from the previous week and was 16% lower year-over-year. Meanwhile, the seasonally adjusted Purchase Index increased 2%. Despite the increase in purchase activity, purchases remain 10% lower year-over-year.

“Mortgage rates reached their highest level since June 2021, but application activity changed little this week. An increase in home purchase applications offset a slight decline in refinances,” said Joel Kan, MBA's associate vice president of Economic and Industry Forecasting. “The increase in purchase applications was welcome news, but was primarily driven by a 2% gain in conventional purchase applications, which kept the average loan size elevated.”    

“The 30-year fixed-rate reached 3.18% last week and has risen 15 basis points over the past month, resulting in an 11% drop in refinance applications during this time. Government refinance applications fell over 3% last week, driven by a decline in FHA refinances and an 8-basis-point increase in the average FHA mortgage rate. We continue to expect weakening refinance activity as rates move higher and borrowers see less of a rate incentive.”

Additionally, the refinance share of mortgage applications decreased to 63.9% of total applications from 64.5% the previous week. The adjustable-rate mortgage share of activity remained unchanged at 3.4% of total applications, according to the MBA's report.  

The FHA share of total applications decreased to 10.2% from 10.5% the week prior. The VA share of total applications decreased to 10.2% from 10.3% the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the week prior.