Mortgage applications inch higher in weekly survey

But activities still weak compared to previous year, says MBA

Mortgage applications inch higher in weekly survey

Mortgage applications have increased from one week earlier, according to data from the Mortgage Bankers Association’s weekly mortgage applications survey for the week ending Friday, June 24.

The MBA’s market composite index, which measures the volume of mortgage loan applications, increased 0.7% on a seasonally adjusted basis from the week prior. Unadjusted, this was a 20% decrease.

The refinance index, covering refinancing and prepayment activity, rose 2% from a week ago and was 80% lower than the same week of the previous year.

The purchase index, covering all mortgage applications for purchases of single-family homes, inched slightly higher by 0.1% on a seasonally adjusted basis from the prior week. Unadjusted, this was a 21% decreased from the previous week and 24% down from the same week in 2021.

“Mortgage rates continue to experience large swings. After increasing 65 basis points during the past three weeks, the 30-year fixed rate declined 14 basis points last week to 5.84%. Rates are still significantly higher than they were a year ago, when the 30-year fixed rate was at 3.2%,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “The decline in mortgage rates led to a slight increase in refinancing, driven by an uptick in conventional loans. However, refinances are still 80% lower than a year ago and more than 60% below the historical average.”

“Overall purchase activity has weakened in recent months due to the quick jump in mortgage rates, high home prices, and growing economic uncertainty,” added Kan. “Purchase applications were essentially flat last week but were supported by a 6% increase in government loans. The average purchase loan amount declined to $413,500, which is an ongoing downward trend since it hit a record $460,000 in March 2022.”

The refinance share of mortgage activity rose to 30.3% of total applications, up 0.6% from last week, just as the ARM share of activity dipped to 10.1% of total applications.

The FHA share of total applications didn’t budge from the 12% reported in the previous week, while the VA share of applications went up 11.2% from the 10.7% of last week. Additionally, the USDA share of applications increased to 0.6% from 0.5% the previous week.

The MBA survey also revealed the latest average contract rates for the following loan types, showing effective rates that decreased across the board:

  • 30-year fixed rate mortgages with conforming loan balances of $647,200 or less: decreased to 5.84% from 5.98%, with points also decreasing to 0.64 from 0.77 (including origination fee) for 80% loan-to-value ratio (LTV) loans
  • 15-year fixed rate mortgages: increased to 5.06% from 5.05%, with points decreasing to 0.72 from 0.68 (including origination fee) for 80% LTV loans
  • 5/1 ARMs, the average rate decreased to 4.64% from 4.78%, with points decreasing to 0.72 from 0.84 (including origination fee) for 80% LTV loans

The result of this week’s survey was adjusted to account for the Juneteenth holiday, said the MBA.