MBA Weekly Survey Jan. 4, 2023: Mortgage Applications Down 13% over Holidays

Mortgage applications fell by 13.2 percent over the two-week holiday period to their lowest level in 26 years, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the weeks ending December 23 and December 30. 

The results include adjustments to account for the holidays.

The Market Composite Index decreased by 13.2 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased by 39.4 percent from two weeks ago. 

The holiday adjusted Refinance Index decreased by 16.3 percent from the two weeks ago and was 87 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.3 percent of total applications from 28.8 percent the previous week.

The seasonally adjusted Purchase Index decreased by 12.2 percent from two weeks earlier. The unadjusted Purchase Index decreased by 38.5 percent from two weeks ago and was 42 percent lower than the same week one year ago.

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The FHA share of total applications increased to 14.0 percent from 13.1 percent the week prior. The VA share of total applications increased to 13.4 percent from 12.0 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent.

“The end of the year is typically a slower time for the housing market, and with mortgage rates still well above 6 percent and the threat of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest level since 1996,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Purchase applications have been impacted by slowing home sales in both the new and existing segments of the market. Even as home-price growth slows in many parts of the country, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market.”

Kan noted refinance applications remain less than a third of the market and were 87 percent lower than a year ago as rates remained close to double what they were in 2021. “Mortgage rates are lower than October 2022 highs, but would have to decline substantially to generate additional refinance activity,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.58 percent from 6.42 percent, with points increasing to 0.73 from 0.65 (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 $647,200) remained at 6.12 percent, with points increasing to 0.45 from 0.37 (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 6.45 percent from 6.41 percent, with points increasing to 1.24 from 1.13 (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 6.06 percent from 5.97 percent, with points increasing to 0.70 from 0.57 (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 5.61 percent from 5.45 percent, with points decreasing to 0.62 from 0.95 (including origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The ARM share of activity decreased to 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.