Following a
slight decrease of 1.2% the previous week, mortgage applications increased 6.3% from one week earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending May 5, 2023.
The week’s numbers:
- The Market Composite Index, a measure of mortgage loan application volume, increased 6.3% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index increased 7% compared with the previous week.
- The Refinance Index increased 10% from the previous week and was 44% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 5% from one week earlier.
- The unadjusted Purchase Index increased 5.3% compared with the previous week and was 32% lower than the same week one year ago.
- The refinance share of mortgage activity increased to 28.0% of total applications from 27.2% the previous week.
- The adjustable-rate mortgage (ARM) share of activity decreased to 6.8% of total applications.
- The FHA share of total applications decreased to 12.1% from 12.5% the week prior.
- The VA share of total applications increased to 12.9% from 11.3% the week prior.
- The USDA share of total applications decreased to 0.4% from 0.5% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.48% from 6.50%, with points decreasing to 0.61 from 0.63 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from the previous week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.33% from 6.37%, with points decreasing to 0.51 from 0.54 (including the origination fee) for 80% LTV loans. The effective rate decreased from the previous week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.41% from 6.43%, with points decreasing to 1.01 from 1.02 (including the origination fee) for 80% LTV loans. The effective rate decreased from the previous week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.91% from 6.01%, with points increasing to 0.58 from 0.55 (including the origination fee) for 80% LTV loans. The effective rate decreased from the previous week.
- The average contract interest rate for 5/1 ARMs decreased to 5.35% from 5.48%, with points decreasing to 0.79 from 1.14 (including the origination fee) for 80% LTV loans. The effective rate decreased from the previous week.
MBA’s take:
“Mortgage applications responded positively to a drop in rates the previous week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth. Mortgage rates for all surveyed loan types decreased over the week with the 30-year fixed rate at 6.48 percent,” said Joel Kan, MBA’s vice president and deputy chief economist.
He continued, “Purchase applications increased 5% the previous week, but were still more than 30 percent below last year’s level. Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many homebuyers. Refinance activity jumped 10% to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels.”