Mortgage loan application volume fell by 6.8% 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 6.8%. The adjusted purchase index rose by 1%, while the unadjusted purchase index rose 1% and was 10% lower YOY.
The refinance index fell 15% and was down 60% YOY. Refinances made up just 40.6% of total applications, down from 44.8%.
Mortgage rates hit a three-year high at 4.80%, putting further pressure on dwindling refinances.
“Not surprisingly, refinance application volume declined further, as fewer borrowers have an incentive to apply at rates that are significantly higher than a year ago,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist.
“Even with the ongoing climb in rates, purchase application volumes were little changed last week. This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market. Given these hurdles, it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”
In January, First American Financial’s Real House Price Index rose 27% from the year prior, making it the fastest-growing RHPI – and fastest annual decline in affordability – since 2004. But despite affordability declining year-over-year, real house-buying power is actually near a record high.
Home prices remain 29% below their peak in April 2006 when adjusted for higher income levels and historically low mortgage rates. All 50 markets analyzed by First American are more affordable than at the peak of the last housing boom.
The FHA share of total applications increased to 9.3%. The VA share of total applications fell to 9.5% from 9.8%, while the USDA share of total applications rose to 0.5% from 0.4%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 4.50% to 4.80%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 4.11% to 4.40%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose from 4.40% to 4.66%.