Mortgage loan application volume dropped another 1.2% after plunging by 11% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.
The adjusted Market Composite Index, a measure of mortgage loan application volume, fell by 1.2%. The adjusted purchase index didn’t budge, moving 0%, while the unadjusted purchase index fell by 1% and was 16% lower YOY.
The refinance index fell 4% and was down 75% YOY. Refinances made up 32.3% of total applications.
ARM activity fell to 9.4% of total applications.
“The 30-year fixed rate declined for the second straight week to 5.46% but remains well above what borrowers were used to over the past two years. Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks. Compared to January 2022, refinance activity is down 66%,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Higher mortgage rates are also impacting purchase market conditions, as the purchase index remained close to lows last seen in the spring of 2020 when a significant portion of activity was put on hold due to the onset of the pandemic. Currently, higher rates, low inventory, and high prices are keeping prospective buyers out of the market.”
New-home sales fell 16.6% in April from the revised March figures and were down 26.9% YOY, prompting heightened recession fears.
“The April drop for new home sales is a clear recession warning,” NAHB Chief Economist Robert Dietz said.
“The combination of higher prices and increased interest rates are generating a notable slowing of the housing market. While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”
The FHA share of total applications rose to 11.3% from 11.1%. The VA share of total applications fell to 10.4% from 10.5%, while the USDA share remained unchanged at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased from 5.49% to 5.46%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances also fell from 5.03% to 5.02%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose from 5.32% to 5.36%, and for 5/1 ARMs it rose to 4.49% from 4.42%.