MBA Weekly Survey Jan. 11, 2023: Rates Down, Refis Up
Mortgage rates fell sharply last week, and borrowers—particularly those looking to refinance—took advantage, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending January 6.
The Market Composite Index increased by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 48 percent from the previous week.
The unadjusted Refinance Index increased by 5 percent from the previous week but was 86 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.7 percent of total applications from 30.3 percent the previous week.
The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier to its lowest level since 2014. The unadjusted Purchase Index increased by 47 percent from the previous week and was 44 percent lower than the same week one year ago.
The FHA share of total applications decreased to 13.4 percent from 14.0 percent the week prior. The VA share of total applications decreased to 13.2 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 declined last week as markets reacted to data showing a weakening economy and slowing wage growth,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “All loan types in the survey saw a decline in rates, with the 30-year fixed rate falling to 6.42 percent.”
Kan noted purchase applications continued to be hampered by broader weakness in the housing market and declined slightly over the week. “There was an increase in refinance activity as a result of the 16-basis-point decline in rates, as both conventional and government refinance applications increased,” he said. “However, the overall pace of refinance applications was lower than November and December’s 2022 averages, and over 80 percent lower than a year ago. Refinances were about 30 percent of all applications last week — well below the past decade’s average of 58 percent.”
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.42 percent from 6.58 percent, with points unchanged at 0.73 (including origination fee) for 80 percent loan-to-value ratio 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 $647,200) decreased to 6.09 percent from 6.12 percent, with points increasing to 0.66 from 0.45 (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 6.45 percent, with points decreasing to 1.03 from 1.24 (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 decreased to 5.94 percent from 6.06 percent, with points decreasing to 0.62 from 0.70 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 5.37 percent from 5.61 percent, with points increasing to 0.72 from 0.62 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity remained unchanged at 7.3 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.