MBA Weekly Survey Mar. 8, 2023: Applications Up Despite Higher Rates

Interest rates rose again last week—but instead of dampening mortgage application activity, borrowers responded with across-the board increases, Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending Mar. 3. 

The Market Composite Index increased by 7.4 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased by 9 percent from the previous week. 

The unadjusted Refinance Index increased by 9 percent from the previous week, but was 76 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 28.9 percent of total applications from 28.7 percent the previous week.

The seasonally adjusted Purchase Index increased by 7 percent from one week earlier. The unadjusted Purchase Index increased by 9 percent from the previous week but was 42 percent lower than the same week one year ago.

The FHA share of total applications increased to 12.8 percent from 12.0 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.6 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

“The 30-year fixed rate rose to 6.79 percent – the highest level since November 2022 and 270 basis points higher than a year ago,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week. Comparing the application indices from a year ago, purchase applications were still down 42 percent, and refinance activity was down 76 percent. Many borrowers are waiting on the sidelines for rates to come back down.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.79 percent from 6.71 percent, with points increasing to 0.80 from 0.77 (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 6.49 percent from 6.44 percent, with points increasing to 0.59 from 0.49 (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 6.56 percent from 6.45 percent, with points increasing to 1.21 from 1.19 (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 6.25 percent from 6.13 percent, with points increasing to 1.01 from 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 5.75 percent from 5.73 percent, with points increasing to 0.95 from 0.86 (including origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The ARM share of activity increased to 8.6 percent of total applications.

NOTE: Upon receiving revised data from one of its participants, MBA revised results of its Weekly Applications Survey for seven weeks, from week ending Jan. 13 to Feb. 24. This week’s results are compared to the revised results from the week ending Feb. 24:

The prior data showed lower purchase and higher refinance application volume than the revised data.  At a high level, the impacts of the revision are:

–The non- seasonally adjusted market index shows only small changes in some weeks within this interval.

–The unadjusted purchase index is higher across all weeks post-revision compared to pre-revision. The seasonally adjusted purchase index is still at a 28-year low for the week ending Feb. 24, despite its increase post-revision.

–The unadjusted refinance index is lower across all weeks post-revision compared to pre-revision.

–The unadjusted government index was minimally impacted across all weeks.

–Interest rates were largely unaffected. The one exception is for the 15-year fixed-rate mortgage rate for the week ending Jan. 13, which is now slightly higher.

–MBA maintained the holiday adjustments applied to the data pre-revision: half-day adjustment for Martin Luther King Jr. Day for week ending Jan. 20; no adjustment for Presidents’ Day for week ending Feb. 24.

–Seasonal adjustments were re-estimated and changed slightly as a result of the revision to the unadjusted data.

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.