Mortgage applications increased last week, with purchase applications reaching their highest level of activity since May.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 3%.
Adjusted purchase applications rose by 3%, though the unadjusted index was down 8% from the week before and 21% lower YOY.
Refinances rose, up 3% from the week prior. They remain 32% lower than the same time last year, comprising only 27.2% of total applications. In the past decade, refis averaged 58% of total activity.
The average interest rate for 30-year fixed loans rose from 6.73% to 6.75%, breaking a three-week streak of declines.
MBA VP and Deputy Chief Economist Joel Kan noted that though the 30-year ticked up, changes across loan types were inconsistent. The jumbo rate was once again higher than the conforming rate, averaging 6.91%, and the spread between the two widened by 16 basis points.
“To put this into perspective, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points less than the conforming rate,” he said.
As high rates remain sticky and potential sellers hold off listing their homes, new home sales have contributed to increasing purchase applications.
“New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market. Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages,” Kan added.
Homebuilders are working overtime to accommodate surging demand. Americans still want to buy homes despite the high-rate environment, but the existing inventory is low. New home construction surged in May at the fastest pace in over a year.
Builders are no longer having to slash prices to attract buyers, with only 25% offering price drops in June, a decline from previous months.
The FHA share of total applications fell from 13.3% to 12.9%, with an average interest rate of 6.74%. The VA share rose from 11.9% to 12.2%, and the USDA share remained unchanged at 0.4%.
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