MBA Weekly Survey May 3, 2023: Purchase Apps Down; Refis Up

Overall mortgage applications fell from one week earlier, although refinance applications rose slightly as interest rates fell, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending April 28. 

The Market Composite Index fell by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 0.4 percent from the previous week. 

However, the unadjusted Refinance Index increased by 1 percent from the previous week but was 51 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 27.2 percent of total applications from 26.8 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 1 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 12.5 percent from 12.6 percent the week prior. The VA share of total applications increased to 11.3 percent from 11.2 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

“Elevated rates continue to both impact homebuyer affordability and weaken demand for refinancing,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Home purchase activity has been very sensitive to rates and local market trends, including the very low supply of existing home inventory. However, newly constructed homes account for a growing share of inventory, giving more options for prospective buyers.”

Kan noted the jumbo-conforming spread continues to narrow, “an indication that there is reduced lender appetite for jumbo loans following the recent turmoil in the banking sector and heightened concerns about liquidity. The spread was 13 basis points last week, after being as wide as 64 basis points in November 2022.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.50 percent from 6.55 percent, with points holding at 0.63 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week. “Still 114 basis points higher than a year ago,” Kan said.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.37 percent from 6.40 percent, with points increasing to 0.54 from 0.50 (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 increased to 6.43 percent from 6.41 percent, with points decreasing to 1.02 from 1.04 (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 decreased to 6.01 percent from 6.03 percent, with points decreasing to 0.55 from 0.56 (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 increased to 5.48 percent from 5.47 percent, with points decreasing to 1.14 from 1.18 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity increased 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.