Mortgage loan application volume dipped last week despite rates slipping, affected by the holiday and the weakening economy, according to the Mortgage Bankers Association’s weekly survey.
The adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 0.8%.
The adjusted purchase index rose 4%, while the unadjusted purchase index decreased by 31% and was 41% lower YOY.
The 30-year fixed rate dropped to 6.49%, having now fallen 57 bps in just four weeks. Rates declined for all other loan types, as well.
“The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity.”
Refinances fell another 13% and comprised just 26% of total applications.
This is their lowest share since 2000.
Declining refis have contributed to major lenders seeing huge losses this year. Rocket reported $25.6 billion in loan-origination volume in Q3 2022, down from $34.5 billion in Q2 and $88 billion YOY.
“In the mortgage origination business, as the saying goes, ‘Live by the refi, die by the refi,'” Pat Dalrymple, a western Colorado mortgage professional, noted in a recent column. “Circumstances can combine to dramatically curtail refi requests.”
Some data suggests about 100,000 current borrowers could benefit from a refinance thanks to the latest dip in rates.
The ARM share of activity rose to 9% of applications.
The FHA share of total applications fell from 13.4% to 12.2%, with an average interest rate of 6.93%.
The VA share rose to 11.2% from 10.5%, and the USDA share dropped to 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from 6.66% to 6.57%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances decreased from 6.08% to 6.02%, and for 5/1 ARMs fell from 5.78% to 5.48%.
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