Mortgage loan application volume fell by 6.3% to its lowest level since the spring of 2019, the Mortgage Bankers Association’s (MBA) weekly survey shows.
The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 6.3%. The adjusted purchase index fell by 3%, while the unadjusted purchase index fell by 3% and was 9% lower YOY.
The refinance index fell 10% and was down 62% YOY. Refinances made up just 38.8% of total applications, down from 40.6%.
Mortgage rates hit 4.90% in their fourth straight week of increases, putting further pressure on dwindling refinances. Rates are now up 1.5 percentage points from the same time last year.
“The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“However, insufficient for-sale inventory is restraining purchase activity. Additionally, the elevated average purchase loan size, and steeper 8% drop in FHA purchase applications, are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges.”
Stock shortages have buoyed housing demand through interest rate increases as home shoppers compete for a limited number of houses. As a result, home price growth has reached record highs. February home prices jumped 20% YOY and 2.2% from the prior month.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” said Zillow senior economist Jeff Tucker. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
Affordability is now at its lowest ever point outside of 2004-2007. The monthly principal and interest payment for an average-priced home is up 24% year-to-date.
It now takes 29.1% of the median household income to that payment, up from 19.3% 15 months ago and 4 percentage points more than the 1995-2003 long-term average.
The FHA share of total applications increased to 9.3%. The VA share of total applications fell to 9.5% from 9.8%, while the USDA share of total applications rose to 0.5% from 0.4%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 4.80% to 4.90%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 4.40% to 4.51%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose from 4.66% to 4.90%.