MBA Weekly Survey May 10, 2023: Applications Rise as Rates Drop

Mortgage rates fell modestly last week, and mortgage applicants took advantage, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 5. 

All three indices rose. The Market Composite Index increased by 6.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 7 percent from the previous week.

The unadjusted Refinance Index increased by 10 percent from the previous week but was 44 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 28.0 percent of total applications from 27.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 5.3 percent from the previous week and was 32 percent lower than the same week one year ago.

The FHA share of total applications decreased to 12.1 percent from 12.5 percent the week prior. The VA share of total applications increased to 12.9 percent from 11.3 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Mortgage rates for all surveyed loan types decreased over the week with the 30-year fixed rate at 6.48 percent. Purchase applications increased 5 percent last week but were still more than 30 percent below last year’s level.”

Kan noted lower rates from week to week have helped buyers in the market, “but limited for-sale inventory remains a challenge for many homebuyers. Refinance activity jumped 10 percent to its highest levels since September 2022, although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels,” 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 6.48 percent from 6.50 percent, with points decreasing to 0.61 from 0.63 (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 6.33 percent from 6.37 percent, with points decreasing to 0.51 from 0.54 (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 6.41 percent from 6.43 percent, with points decreasing to 1.01 from 1.02 (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 5.91 percent from 6.01 percent, with points increasing to 0.58 from 0.55 (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 5.35 percent from 5.48 percent, with points decreasing to 0.79 from 1.14 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 6.8 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.