Mortgage applications just barely stayed positive last week, ticking up slightly.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 0.5%.
Adjusted purchase applications rose by 2%, while the unadjusted index was down 0.1% from the week before and 32% lower YOY.
The average interest rate for 30-year fixed loans fell for a third week from 6.77% to 6.73%.
Though it’s not a huge drop, any dip will pull some rate-sensitive buyers off the sidelines. This is especially true for new construction, which is having a boom moment thanks to the crippling shortage of existing homes for sale.
“Purchase applications increased, driven by a 2% gain in conventional purchase applications and a 3% increase in FHA purchase activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“First-time homebuyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory.”
Jumbo loans made the stage by remaining higher than conforming loans for a second straight week, rising to 6.80%.
Jumbo loans are riskier than conforming loans, so it takes more to qualify, but those who can are usually able to save big. Not so right now.
“The last time jumbo rates were higher was in December 2021. Tighter liquidity conditions have prompted jumbo lenders to pull back, increasing rates in the process,” Kan said.
Refinances fell, down 2% from the week prior. They remain 40% lower than the same time last year, comprising only 26.9% of total applications. In the past decade, refis averaged 58% of total activity.
The FHA share of total applications rose from 13% to 13.3%, with an average interest rate of 6.74%. The VA share fell to 11.9% from 12.6%, and the USDA share fell from 0.5% to 0.4%.
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