Mortgage loan application volume rose slightly by 0.7% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.
The adjusted Market Composite Index, a measure of mortgage loan application volume, increased by 0.7%. The adjusted purchase index rose 0.1%, while the unadjusted purchase index fell by 21% and was 24% lower YOY.
The refinance index rose by 2% and made up 30.3% of total applications, down 80% from the same time last year.
ARM activity fell to 10.1% of total applications.
“Mortgage rates continue to experience large swings. After increasing 65 basis points during the past three weeks, the 30-year fixed rate declined 14 basis points last week to 5.84%,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Overall purchase activity has weakened in recent months due to the quick jump in mortgage rates, high home prices, and growing economic uncertainty. Purchase applications were essentially flat last week but were supported by a 6% increase in government loan applications. The average purchase loan amount declined to $413,500, which highlights an ongoing downward trend seen since it hit a record $460,000 in March 2022.”
Home sellers have responded to the rapid market shift by reducing their asking prices, but not by nearly enough to entice worried buyers watching mortgage rates soar.
“Many home sellers have it stuck in their head that homes are selling a certain amount above asking, or that they can under-price their home to try to generate a bidding war, but that strategy isn’t working anymore,” said Boston Redfin real estate agent Robin Spangenberg.
“High mortgage rates have kicked a lot of buyers right out of the market. This means sellers need to price their home at whatever they are okay walking away with, because they might only get one or two offers now.”
The FHA share of total applications remained unchanged at 12%. The VA share of total applications rose to 11.2% from 10.7%, while the USDA share rose from 0.5% to 0.6%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 5.84% from 5.98%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell to 5.42% from 5.49%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA stayed at 5.62%, and for 5/1 ARMs fell from 4.78% to 4.64%.
The results include an adjustment for the observance of the Juneteenth holiday.