MBA Weekly Survey Mar. 1, 2023: Rising Rates Push Down Mortgage Applications

Interest rates reached their highest level since November, driving down mortgage application activity, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending February 24. 

The Market Composite Index fell by 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent from the previous week. 

The unadjusted Refinance Index decreased by 6 percent from the previous week and was 74 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.8 percent of total applications from 32.5 percent the previous week.

The seasonally adjusted Purchase Index decreased by 6 percent from one week earlier. The unadjusted Purchase Index decreased by 3 percent from the previous week and was 44 percent lower than the same week one year ago.

The FHA share of total applications remained unchanged at 12.1 percent from the week prior. The VA share of total applications decreased to 11.6 percent from 12.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

“After a brief revival in application activity in January when mortgage rates dropped down to 6.2 percent, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Data on inflation, employment and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates.”

Kan noted both purchase and refinance applications declined last week, with purchase index at a 28-year low for a second consecutive week. “Purchase applications were 44 percent lower than a year ago, as homebuyers again retreat to the sidelines as higher rates crimp affordability,” he said. “Refinance applications account for less than a third of all applications and remained more than 70 percent behind last year’s pace, as a majority of homeowners are already locked into lower rates.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.71 percent from 6.62 percent, with points increasing to 0.77 from 0.75 (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) remained at 6.44 percent, with points decreasing to 0.49 from 0.53 (including origination fee) for 80 percent LTV loans. The effective rate remained the same from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 6.45 percent from 6.39 percent, with points increasing to 1.19 from 1.16 (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 6.13 percent from 5.98 percent, with points remaining at 0.93 (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 5.73 percent from 5.66 percent, with points decreasing to 0.86 from 0.97 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 8.1 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.