Mortgage loan application volume fell 7.2% last week, the Mortgage Bankers Association’s (MBA) weekly survey reports.
The seasonally adjusted Market Composite Index, a measure of mortgage loan application volume, fell 7.2%. The seasonally adjusted purchase index rose 5%, while the unadjusted purchase index dropped 30% and was 8% lower YOY.
The share of refinance applications dropped 15% and was 41% lower YOY. Refinances made up 59.4% of total applications, down from 63.1% the previous week.
The report noted that mortgage rates– which rose to their highest point since April, hitting 3.31%– contributed to the significant decline in refinance applications.
“Over the past three weeks, rates are up 15 basis points and refinance activity has declined over 18 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Despite higher mortgage rates, purchase applications had a strong week, mostly driven by a 6% increase in conventional loan applications. Conventional loans tend to be larger than government loans, and this was evident in the average loan amount, which increased to $414,700 – the highest since February 2021. As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed.”
The share of first-time buyers has fallen from 46% in 2018 to 37% in 2021. Older buyers who can tap their equity have an advantage in a cash-flooded market where homes are selling above their list price.
With equity skyrocketing and houses consistently selling over asking price, current homeowners have an advantage over first-time Millennial buyers without as much to bid.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 3.31% from 3.24%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances dropped from 3.28% to 3.27%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 3.27% to 3.42%