Mortgage Applications Decline in Latest MBA Weekly Survey | My MBA Career

Last Updated on October 6, 2023 by Robert C. Hoopes

Mortgage applications in the United States saw a significant decrease of 6.0 percent from the previous week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. The Market Composite Index, which measures mortgage loan application volume, also saw a decrease of 6.0 percent on a seasonally adjusted basis.

The decrease in applications was primarily driven by a decline in both refinancing and purchase activity. The Refinance Index saw a decrease of 7 percent from the previous week and was 11 percent lower compared to the same week last year. Similarly, the Purchase Index saw a decrease of 6 percent from the previous week and was 22 percent lower compared to the same week last year.

One of the main factors contributing to this decline is the continued rise in mortgage rates. The 30-year fixed mortgage rate has increased for the fourth consecutive week to 7.53 percent, reaching its highest rate since 2000. As a result, mortgage applications have dropped to the lowest level since 1996 and the purchase market has slowed to the lowest level of activity since 1995.

However, there has been an increase in adjustable-rate mortgage (ARM) loan applications, as some borrowers are looking for ways to lower their payments in response to the rising rates. The refinance share of mortgage activity decreased to 31.7 percent, while the ARM share of activity increased to 8.0 percent.

The FHA share of total applications increased to 14.5 percent, suggesting that more borrowers may be opting for government-backed mortgages. On the other hand, the VA share of applications decreased to 10.1 percent.

The average contract interest rates also saw an increase across different types of mortgages. The average contract interest rate for 30-year fixed-rate mortgages reached 7.53 percent, with points increasing to 0.80. Jumbo loan balances had an average contract interest rate of 7.51 percent, with points decreasing to 0.74. FHA-backed mortgages saw an average contract interest rate of 7.29 percent, with points increasing to 1.01. The 15-year fixed-rate mortgages had an average contract interest rate of 6.86 percent, while 5/1 adjustable-rate mortgages had an average contract interest rate of 6.49 percent.

The Mortgage Bankers Association’s Weekly Applications Survey provides comprehensive coverage of over 75 percent of all U.S. retail residential mortgage applications. This survey has been conducted weekly since 1990, making it a valuable resource for monitoring mortgage market trends and activity.