Mortgage applications saw a 2.3% increase for the week ending Aug. 25, 2023, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. This marks the first upswing in application activity in five weeks, although it comes with the caveat that the numbers are still significantly lower than they were a year ago.
The Market Composite Index, a comprehensive gauge for mortgage loan application volume, increased 2.3% on a seasonally adjusted basis and 1% on an unadjusted basis compared to the previous week. Meanwhile, the Refinance Index rose by 3% from the last week, albeit 28% lower than the same week one year ago.
The seasonally adjusted Purchase Index also showed an increase of 2%, even though its unadjusted counterpart slipped by 0.3% compared to the previous week and was 27% lower compared to the same period last year.
“Mortgage rates were mostly unchanged last week, with the 30-year fixed rate remaining at 7.31% – the highest since December 2000," said Joel Kan, MBA’s vice president and deputy chief economist. "Purchase applications increased but were still 27% lower than a year ago, as elevated mortgage rates and tight housing inventory continue to weigh on home buying activity.”
Kan said the sluggish pace of the refinance market was slightly alleviated by a 7.9% surge in conventional refinances, even as government refinance applications took a plunge of over 10% during the past week.
The refinance share of total mortgage applications increased to 30.1% from 29.5% the previous week. Conversely, the adjustable-rate mortgage (ARM) share of total applications decreased to 7.5%.
Regarding government loans, the Federal Housing Administration's (FHA) share of total applications fell to 13.2%, down from 14.3% the previous week. The Veterans Administration (VA) share remained unchanged at 11.6%, and the United States Department of Agriculture (USDA) saw a slight decrease to 0.4% from 0.5%.
The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) remained stable at 7.31%, with points dropping to 0.73 from 0.78. The rates for jumbo loans and FHA-backed 30-year fixed-rate mortgages showed minor fluctuations, while the 15-year fixed-rate mortgages and 5/1 ARMs maintained their rates with minor adjustments in points.
Despite the minor boosts in activity, the mortgage market's overall climate remains uncertain due to lingering high rates and scarce housing inventory, leaving potential homeowners and refinance customers in a tough spot.
