Mortgage apps dip as conforming rate inches up, loan amounts soar

Applications declined in the near term, but the average loan amount set a new record in the Mortgage Bankers Association’s latest weekly report.

While financing costs are still low enough to offset sticker shock from escalating home prices, a slight rise in the average 30-year conforming rate did weigh on borrowers last week, the trade group found.

Overall apps were down 4.1% on a seasonally-adjusted basis during the week ended Jan. 22 due to the uptick in 30-year conforming rates to 2.95%. A decline in average points, and a drop in rates outside the 30-year conforming market failed to offset the 3 basis-point rate increase from a week earlier.

“In a sign that borrowers are increasingly more sensitive to higher rates, large declines in government purchase applications and refinance applications pulled overall activity lower,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release.

The average purchase loan amount hit the record high of $395,200, up from $384,000 a week earlier. Homebuyer app volume fell 4% on a seasonally-adjusted basis from the previous week but was up 16% year-over-year.

In the refi apps index, which has notched highs not seen since 2013, was down 5% in the short term but up 83% from a year ago.

Week-over-week, the share of applications guaranteed by the Department of Veterans Affairs fell to 12.4% from 13.8%, offsetting smaller increases in the share of apps insured by the Federal Housing Administration and in the U.S. Department of Agriculture loan sector.