MBA Weekly Survey Jan. 18, 2023: Lowest Rates in 5 Months Spark Jump in Applications

Mortgage rates fell sharply again last week—to their lowest levels since September—and borrowers jumped at the opportunity, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending January 13. 

The Market Composite Index jumped by 27.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 32 percent from the previous week. 

The unadjusted Refinance Index increased 34 percent from the previous week but was 81 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 31.2 percent of total applications from 30.7 percent the previous week.

The seasonally adjusted Purchase Index increased by 25 percent from one week earlier. The unadjusted Purchase Index increased 32 percent from the previous week and was 35 percent lower than the same week one year ago.

The FHA share of total applications decreased to 13.0 percent from 13.4 percent the week prior. The VA share of total applications decreased to 11.8 percent from 13.2 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” said Mike Fratantoni, MBA SVP and Chief Economist. “Despite these gains, refinance activity remains more than 80% below last year’s pace and purchase volume remains 35% below year-ago levels.”

Fratantoni noted mortgage rates are now at their lowest level since September, and nearly a percentage point below the peak mortgage rate last fall. “As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.23 percent from 6.42 percent, with points decreasing to 0.67 from 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 $726,200) decreased to 6.08 percent from 6.09 percent, with points decreasing to 0.4 from 0.66 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 6.26 percent from 6.39 percent, with points increasing to 1.05 from 1.03 (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 5.58 percent from 5.94 percent, with points decreasing to 0.54 from 0.62 (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 5.31 percent from 5.37 percent, with points increasing to 0.74 from 0.72 (including origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The ARM share of activity decreased to 6.6 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.