Residential Real Estate News
Mortgage Applications Dive 9 Percent in Late January
According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending January 27, 2023, U.S. mortgage applications decreased 9.0 percent from one week earlier.
The Market Composite Index, a measure of mortgage loan application volume, decreased 9.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week.
The Refinance Index decreased 7 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 41 percent lower than the same week one year ago.
"Mortgage rates declined for the fourth straight week and have now fallen almost 40 basis points over the past month. Treasury yields were higher on average last week, while mortgage rates decreased, which was a sign of a narrowing spread between the two," said Joel Kan, MBA's Vice President and Deputy Chief Economist. "The spread between mortgage rates and the 10-year Treasury has been abnormally wide since early 2022. Further narrowing of that spread is expected to put downward pressure on mortgage rates in the coming months. Overall application activity declined last week despite lower rates, which is an indication of the still volatile time of the year for housing activity. Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth. Both trends will help some buyers regain purchasing power."
The refinance share of mortgage activity decreased to 31.2 percent of total applications from 31.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.7 percent of total applications.
The FHA share of total applications increased to 12.0 percent from 11.9 percent the week prior. The VA share of total applications decreased to 11.9 percent from 13.0 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.19 percent from 6.20 percent, with points decreasing to 0.65 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 5.99 percent from 5.92 percent, with points increasing to 0.48 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.18 percent from 6.22 percent, with points decreasing to 0.99 from 1.10 (including the origination fee) for 80 percent LTV loans.
The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.50 percent from 5.54 percent, with points increasing to 0.73 from 0.51 (including the origination fee) for 80 percent LTV loans.
The effective rate increased from last week. The average contract interest rate for 5/1 ARMs decreased to 5.38 percent from 5.44 percent, with points remaining at 0.83 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
