MBA reports overall slowdown, but purchase applications continue to outpace 2024 levels
Mortgage application activity slowed last week as interest rates climbed to their highest level since February. Despite the drop, purchase applications remain higher than they were at the same time last year.
The Mortgage Bankers Association’s (MBA’s) Market Composite Index, which measures total mortgage loan application volume, fell 5.1% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index was down 5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) rose from 6.86% to 6.92%.
“Mortgage rates jumped to their highest level since February last week, with investors concerned about rising inflation and the impact of increasing deficits and debt,” said Mike Fratantoni, senior vice president and chief economist at MBA. “Higher rates led to a slowdown across the board. However, purchase applications are up 13% from one year ago.”
Refinance applications dropped 5% from the previous week but remained 27% higher than the same week in 2024, reflecting sustained interest from borrowers capitalizing on past dips in rates.
Fannie Mae’s Refinance Application-Level Index (RALI) reported a 6.4% decrease in dollar volume of refinance applications from the prior week, though volumes were still up 15.7% year-over-year. RALI’s application count also declined 5.7% week over week, but was 8.7% higher compared to the same week in 2024.
Meanwhile, MBA’s seasonally adjusted purchase index also declined 5% from the prior week, and the unadjusted purchase index was down 6% week over week. Yet, both remain 13% higher than the same week one year ago, underscoring continued buyer interest despite affordability headwinds.
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Application breakdown by loan type:
- Refinance share of total mortgage activity edged up to 36.6%, from 36.4% the week before.
- Adjustable-rate mortgages (ARMs) accounted for 7.1% of total applications, down from the prior week.
- FHA share increased to 17.9%, up from 17.4%.
- VA share declined to 12.6%, from 13.4%.
- USDA share held steady at 0.5%.
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