Mortgage activity decreased for
The MBA's Market Composite Index, a measure of weekly loan-application volumes based on a survey of the trade group's members, dropped a seasonally adjusted 1.2% for the period ending April 28, ending a month characterized by fluctuating borrower activity. One week prior, applications increased 3.7%, but compared to the same seven-day period in 2022, volumes were 39% lower.
Rates declined slightly for the first time in three weeks. The average contract rate among MBA lenders for 30-year mortgages with conforming balances of $726,200 or less declined to 6.5% from 6.55% in the prior survey. But the rate was still 114 basis points higher compared to a year ago. Points remained at 0.63 for 80% loan-to-value ratio loans.
"Elevated rates continue to both impact homebuyer affordability and weaken demand for refinancing," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
Markets are anticipating another 25 basis point hike in the federal funds rate after meetings of central bank officials on Wednesday. Economists will also look for signs that this might be the final hike before a pause as the Federal Reserve assesses results from its recent monetary tightening.
A pause "should bring some much-awaited stability to mortgage rates" as long as financial conditions also stabilize, according to Odeta Kushi, deputy chief economist at First American.
Contract rates of 30-year jumbo mortgages with balances above the conforming amount, also fell, slipping 3 basis points to 6.37% from 6.4%,
"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," said Joel Kan, MBA vice president and deputy chief economist, in a press release.
Lower purchase volumes countered an uptick in refinances last week, leading the composite index downward overall, the MBA found. The seasonally adjusted Purchase Index dropped 2%, while on a year-over-year basis, applications decreased 32.1%.
"Home purchase activity has been very sensitive to rates and local market trends, including the very low supply of existing-home inventory," Kan said. Limited numbers of for-sale listings has prevented prices from dropping significantly, with data from several housing researchers, including CoreLogic and Case-Shiller, showing
"Strong fundamental home buyer demand is there, the problem is finding something for sale," Kushi noted.
Average sizes on purchase applications have likewise gone up in tandem, according to MBA's survey results. The mean amount surged 2.2% to $441,100 last week — its highest point this year — up from $431,600 seven days earlier.
Refinance sizes also took a leap of 3.7% to average $266,200 from $256,700 the previous week. The overall average amount across all applications climbed up 2.3% to $393,600 from $384,600.
Meanwhile, the Refinance Index inched up 0.8% from the prior survey, but remained 50.3% below levels of a year ago, as the current level of interest rates remove most borrower incentive. But with purchases coming in lower, the refinance share of mortgage activity increased to 27.2% of total applications from 26.8% the previous week.
Government-sponsored applications came in mostly flat on a weekly basis, with federally backed loan shares, likewise, seeing little change. Federal Housing Administration-guaranteed mortgages made up 12.5% of overall volume, down from 12.6% in the prior survey, while Department of Veterans Affairs-backed activity took an 11.3% share, up from 11.2%. Applications coming through U.S. Department of Agriculture programs edged up by a tenth of 1% as well, to 0.5% from 0.4%.
While most fixed interest rates declined last week, FHA-backed mortgage borrowers saw theirs inch up. The contract 30-year interest rate averaged 6.43%, compared to 6.41% a week earlier. Points decreased to 1.02 from 1.04 for 80% LTV-ratio loans.
The contract 15-year fixed interest rate took a 2-basis point fall to 6.01% from 6.03% seven days earlier. Points decreased to 0.55 from 0.56.
The hybrid 5/1 adjustable-rate mortgage averaged 5.48%, ticking up from 5.47% the previous week with points falling to 1.14 from 1.18. The loans carry a fixed rate for five years, before adjusting to market values. With interest in ARMs growing in the past year as mortgage rates accelerated, their share relative to total activity last week came in at 7.3%, up from 6.7% a week earlier.
