Mortgage loan application volume plummeted by 8.3% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.
The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 8.3%. The adjusted purchase index fell by 8%, while the unadjusted purchase index fell by 7% and was 17% lower YOY.
The refinance index fell 9% and was down 71% YOY. Refinances made up 35% of total applications, down from 35.7%. Mortgage rates reached their highest level since 2009 last week, and overall application activity dropped to its lowest level since 2018.
“The drop in purchase applications was evident across all loan types. Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices. The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“In a period of high home-price growth and rapidly increasing mortgage rates, borrowers continued to mitigate higher monthly payments by applying for ARM loans. The ARM share of applications last week was over 9% by loan count and 17% based on dollar volume. At 9%, the ARM share was double what it was three months ago, which also coincides with the 1.5 percentage point increase in the 30-year fixed rate.”
Home sellers may be equally wary of putting their homes on the market. Redfin reported that 51% of homeowners currently have a rate under 4%, and might be reluctant to sell and find a new home that will increase their monthly payments.
This may be contributing to the stock shortage, which is keeping competition and home price appreciation high.
The FHA share of total applications increased to 10.6%. The VA share of total applications rose to 10.2%, while the USDA share of total applications remained unchanged at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 5.20% to 5.37%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 4.76% to 4.89%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose from 5.11% to 5.29%