Mortgage Applications Decrease for Second Week

Mortgage applications decreased for the second week in a row, down 4.6% from a decrease of 5.7% the previous week, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending May 19, 2023.

The week’s numbers:

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.6% on a seasonally adjusted basis from one week earlier.
On an unadjusted basis, the Index decreased 5% compared with the previous week.
The Refinance Index decreased 5% from the previous week and was 44% lower than the same week one year ago.
The seasonally adjusted Purchase Index decreased 4% from one week earlier.
The unadjusted Purchase Index decreased 5% compared with the previous week and was 30% lower than the same week one year ago.
The refinance share of mortgage activity remained unchanged at 27.4% of total applications from the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 6.7% of total applications.
The FHA share of total applications increased to 12.5% from 12.0% the week prior.
The VA share of total applications increased to 12.5% from 12.2% the week prior.
The USDA share of total applications increased to 0.5% from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.69% from 6.57%, with points increasing to 0.66 from 0.61 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.57% from 6.46%, with points increasing to 0.57 from 0.38 (including the origination fee) for 80% LTV loans. The effective rate increased from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.56% from 6.39%, with points increasing to 1.24 from 0.97 (including the origination fee) for 80% LTV loans. The effective rate increased from the previous week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 6.15% from 5.96%, with points increasing to 0.72 from 0.68 (including the origination fee) for 80% LTV loans. The effective rate increased from the previous week.
The average contract interest rate for 5/1 ARMs increased to 5.73% from 5.71%, with points increasing to 1.19 from 1.10 (including the origination fee) for 80% LTV loans. The effective rate increased from the previous week.

MBA’s take:

“Mortgage applications declined almost 5% the previous week as borrowers remained sensitive to higher rates. The 30-year fixed rate increased to 6.69%, the highest level since March,” said Joel Kan, MBA’s vice president and deputy chief economist. “Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications. Refinance activity remains limited, with the refinance index falling to its lowest level in two months and more than 40% below last year’s pace.”

Added Kan, “Investors remained attuned to the uncertainty around the U.S. debt ceiling and communication from several Federal Reserve officials the previous week, which sent Treasury yields higher, along with mortgage rates. Economic data released over the past week have also pointed to a still-resilient economy. The housing market received positive data on new residential construction – which is seen as a key solution to the lack of housing inventory.”