Latest MBA Weekly Survey Shows Increase in Mortgage Applications

Last Updated on January 29, 2024 by Robert C. Hoopes

Title: Mortgage Applications Experience Modest Growth Amid Rising Interest Rates

Subtitle: MBA’s Weekly Mortgage Applications Survey Reveals Positive Trends Despite Challenging Market Conditions

Mortgage application activity in the United States increased by 3.7 percent in the previous week, according to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The Market Composite Index, which measures mortgage loan application volume, also reported a corresponding 3.7 percent growth on a seasonally adjusted basis.

Though the unadjusted basis of the Index showed a decline of 4 percent compared to the previous week, there was still cause for optimism. The holiday adjusted Refinance Index noted a 7 percent decrease from the previous week and an 8 percent dip from the same period the previous year. Similarly, the unadjusted Refinance Index experienced a 16 percent decline week-over-week and also reflected an 8 percent drop from the same time last year.

There was, however, positive news in the purchase activity segment. The seasonally adjusted Purchase Index demonstrated an encouraging 8 percent increase from the previous week. Although the unadjusted Purchase Index had a smaller growth of 3 percent compared to the prior week, it remained 18 percent lower than the same period a year ago.

Joel Kan, MBA’s Vice President and Deputy Chief Economist, acknowledged the steady surge in purchase activity despite a slight increase in mortgage rates. He attributed the decline in refinance applications to homeowners lacking incentives to refinance at current rates, leaving the refinance share of mortgage activity at a modest 32.7 percent, down from 37.5 percent the previous week.

Additionally, the survey highlighted an increase in the adjustable-rate mortgage (ARM) share of activity, which accounted for 6.3 percent of total applications.

Regarding loan types, there were subtle fluctuations in market shares. The FHA share of total applications reduced to 14.1 percent, down from 14.3 percent the previous week, while the VA share declined to 13.7 percent from 14.2 percent. The USDA share of total applications similarly decreased to 0.4 percent, compared to 0.5 percent the previous week.

The survey also revealed average contract interest rate increases across most mortgage products. Specifically, the 30-year fixed-rate mortgages experienced a rise in average contract interest rates, with conforming loan balances ($726,200 or less) increasing to 6.78 percent. Average contract interest rates for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) reached 6.94 percent. FHA-backed 30-year fixed-rate mortgages followed suit, showing an increase to 6.51 percent. The average contract interest rates for 15-year fixed-rate mortgages rose to 6.31 percent, while 5/1 ARMs averaged at 6.22 percent.

MBA’s Weekly Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications. Participants in the survey include mortgage bankers, commercial banks, and thrifts, making it a reliable indicator of industry trends and market sentiments.

Although the rising interest rates presented challenges for homeowners, the resilient growth in purchase activity showcased the underlying strength of the housing market.