Mortgage Applications Tick Up

Mortgage loan application volume rose by 2.5% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.

The adjusted Market Composite Index, a measure of mortgage loan application volume, rose by 2.5%. The adjusted purchase index increased by 4%, while the unadjusted purchase index was up by 5% and was 11% lower YOY.

The refinance index increased 0.2% and was down 71% YOY. Refinances made up 33.9% of total applications, down from 37.1%. 

ARM activity accounted for 9.3% of total applications.

“The 30-year fixed rate was 5.36%, up over two percentage points from a year ago. The 127-basis-point jump in rates over the past two months has triggered a 49% drop in refinance activity,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

“Purchase applications increased for conventional, FHA, and VA loans and were up 4% overall. This is potentially a good sign for the spring home buying season, which has seen a slow start thus far. The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments.”

Home prices rose by 20.9% YOY in March, setting another record and marking the 122nd consecutive month of YOY home price increases nationally.

Affordability is declining as housing costs grow faster than incomes. The typical homebuyer’s monthly mortgage payment is up 39%, the largest YOY gain on record. Though price appreciation has created a “mass wealth event” for homeowners, it has created serious affordability problems for first-time buyers and renters.

The Fed raised its benchmark interest rate by half a percentage point this week, intending to slow demand and rein in price increases.

The FHA share of total applications increased to 11.1%. The VA share of total applications rose to 10.3%, while the USDA share of total applications dropped from 0.5% to 0.4%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from 5.37% to 5.36%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 4.89% to 4.92%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 5.29% to 5.27%