Key Takeaways from Mortgage Bankers Association (MBA) Mortgage Application Weekly Survey
- Mortgage applications have dropped by 5.7% in the week ending May 12 compared to the previous week.
- Refinance applications accounted for 27% of total applications, showing a decline of 8%.
- The 30-year fixed mortgage rate increased to 6.57%, the highest in two months.
- Purchase applications decreased by 5% due to market volatility and scarce inventory.
- The adjustable-rate mortgage (ARM) share of activity dropped to 6.5%.
Decrease in Mortgage Applications
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2023, mortgage applications have seen a decrease of 5.7 percent from the week before. This decrease in the Market Composite Index, a measure of mortgage loan application volume, reflects a shift in both the seasonally adjusted and unadjusted bases.
Refinance and Purchase Indices
The Refinance Index saw a decrease of 8 percent from the previous week and is now 43 percent lower than the same week a year ago. With the seasonally adjusted Purchase Index also decreasing by 4.8 percent from the prior week, it appears that fluctuations in mortgage rates have had a significant impact on application volumes.
Role of Mortgage Rates in Application Activity
As Joel Kan, MBA’s Vice President and Deputy Chief Economist noted, despite essentially flat Treasury yields, mortgage rates increased. This rise, coupled with rate volatility and scarce inventory in many parts of the country, led to a slow in application activity. The 30-year fixed-rate saw a nine-basis point increase to 6.57 percent, the highest level in two months.
Shift in Refinance Applications
Refinance applications, which made up 27% of all applications, saw a significant drop of almost 8% last week. This trend is reflective of most borrowers already having lower rates on their mortgages and those currently in the market being particularly rate-sensitive.
Breakdown by Mortgage Type
The refinance share of mortgage activity fell to 27.4% of total applications. The FHA share also saw a slight decrease, moving to 12.0% from 12.1% the week before. This pattern continued with the VA share of total applications, which fell to 12.2% from 12.9% the previous week. The USDA share remained unchanged. The adjustable-rate mortgage (ARM) share of activity saw a decrease, dropping to 6.5% of total applications.
Changes in Contract Interest Rates
Lastly, changes were noted in contract interest rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.57%. Meanwhile, 30-year fixed-rate mortgages with jumbo loan balances saw an increase to 6.46%. However, 30-year fixed-rate mortgages backed by the FHA saw a decrease to 6.39%. The average contract interest rate for 15-year fixed-rate mortgages increased to 5.96%, and the average contract interest rate for 5/1 ARMs saw an increase to 5.71%.
