MBA Weekly Survey Feb. 15, 2023: Rising Rates Push Down Applications

After falling for the past five weeks, mortgage interest rates jumped by nearly a quarter percentage point last week, dampening mortgage application activity, the Mortgage Bankers Association reported Wednesday.

For the week ending Feb. 10, the MBA Weekly Mortgage Applications Survey reported its Market Composite Index decreased by 7.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 7 percent from the previous week. 

The unadjusted Refinance Index decreased by 13 percent from the previous week and was 76 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 32.0 percent of total applications from 33.9 percent the previous week.

The seasonally adjusted Purchase Index decreased by 6 percent from one week earlier. The unadjusted Purchase Index decreased by 5 percent from the previous week and was 43 percent lower than the same week one year ago.

The FHA share of total applications increased to 12.6 percent from 11.9 percent the week prior. The VA share of total applications decreased to 12.6 percent from 13.4 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Mortgage applications decreased for the second time in three weeks because of these higher rates. Refinance borrowers, both rate/term and cash-out, remain on the sidelines as current rates provide little financial incentive to act.”

Kan noted purchase applications dropped to their lowest level since the beginning of this year and were more than 40 percent lower than a year ago. “Potential buyers remain quite sensitive to the current level of mortgage rates, which are more than two percentage points above last year’s levels and have significantly reduced buyers’ purchasing power,” 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 6.39 percent from 6.18 percent, with points increasing to 0.70 from 0.64 (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 6.26 percent from 5.96 percent, with points decreasing to 0.43 from 0.55 (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 increased to 6.25 percent from 6.14 percent, with points increasing to 1.14 from 0.88 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.85 percent from 5.64 percent, with points increasing to 0.81 from 0.63 (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 decreased to 5.53 percent from 5.56 percent, with points decreasing to 0.72 from 0.80 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 6.9 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.