Applications Dip As Rates Jump

Mortgage applications reversed an upward streak as a jump in rates hurt refinance activity.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — dropped by 6.2%, flipping from the week prior’s 11.2% jump.

The dip coincides with mortgage rate increases. The 30-year fixed rose to 6.72% from 6.67%.

Refinances dropped by 13% on the week, driving totals down, though they are still 70% stronger year-over-year. They accounted for 42% of applications.

Adjusted purchase applications were up 0.1%, while the unadjusted index increased 1% and was 6% higher year-over-year.

A boost in FHA activity helped buoy purchase volume to its highest level in six weeks.

“Overall, purchase application volume is up 6% compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

Some metros have recovered enough from the pandemic buying boom to flip toward buyers’ markets.

Savvy shoppers in Florida, Texas, and Louisiana have plenty of available inventory to choose from, giving buyers negotiating power and time.

But in tight markets in the Northeast and Midwest, new construction is necessary to keep up with growing populations. 

Builders have been working hard to make up for stock shortages, but economic uncertainty is taking its toll. Homebuilder confidence has dipped to a seven-month low.

Housing starts were up last month but permits have plummeted.

“January’s dramatic drop in housing starts, largely driven by exceptionally cold weather, reversed in February, but a decline in housing permits tempered the optimism. Looming tariffs are creating considerable uncertainty about construction costs, limiting activity,” Bloomberg economist Eliza Winger commented.