MBA Weekly Survey May 17, 2023: Rates Up, Applications Down

Mortgage applications fell last week as interest rates rose, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 12. 

The Market Composite Index fell by 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index fell by 6 percent from the previous week. 

The unadjusted Refinance Index decreased by 8 percent from the previous week and was 43 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 27.4 percent of total applications from 28.0 percent the previous week.

The seasonally adjusted Purchase Index decreased by 4.8 percent from one week earlier. The unadjusted Purchase Index decreased by 5 percent from the previous week and was 26 percent lower than the same week one year ago.

The FHA share of total applications decreased to 12.0 percent from 12.1 percent the week prior. The VA share of total applications decreased to 12.2 percent from 12.9 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

“Mortgage rates increased last week even as Treasury yields were essentially flat, with the spread between the two rates widening to 310 basis points. Mortgage application activity slowed, as most mortgage rates in the survey increased, with the 30-year fixed rate jumping nine basis points to its highest level in two months at 6.57 percent,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Purchase applications decreased 5 percent to its slowest pace in a month, as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce.”

Kan noted refinance applications accounted for 27 percent of all applications and dropped nearly 8 percent last week. “Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate-sensitive,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.57 percent from 6.48 percent, with points unchanged at 0.61 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.46 percent from 6.33 percent, with points decreasing to 0.38 from 0.51 (including 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 FHA decreased to 6.39 percent from 6.41 percent, with points decreasing to 0.97 from 1.01 (including 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 increased to 5.96 percent from 5.91 percent, with points increasing to 0.68 from 0.58 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to 5.71 percent from 5.35 percent, with points increasing to 1.1 from 0.79 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 6.5 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.