Mortgage Applications Decrease in Latest Weekly Survey

Last Updated on October 27, 2023 by Robert C. Hoopes

Title: Mortgage Applications Decrease as Higher Interest Rates Impact Homebuyers

In the latest report from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, it has been revealed that mortgage applications have experienced a decline of 1.0 percent compared to the previous week. The Market Composite Index, which measures loan application volume, has also witnessed a 1.0 percent decrease on a seasonally adjusted basis. These statistics emphasize the impact of rising interest rates on the housing market.

Despite the overall decline, the Refinance Index saw a 2 percent increase compared to the previous week. However, this figure is still 8 percent lower than the same week last year. On the other hand, the Purchase Index saw a decline of 2 percent, marking a 22 percent decrease from the same week in the previous year. This trend highlights the challenges faced by homebuyers due to the rising mortgage rates.

The survey further reveals that mortgage rates have been steadily increasing for the past seven weeks and have now reached their highest point since 2000, standing at an alarming 7.9 percent. The continuous rise in mortgage rates has deterred prospective homebuyers from entering the market and has also suppressed refinance activity.

One notable trend has been the increase in adjustable-rate mortgage (ARM) applications, accounting for the highest share since November 2022, at 9.5 percent. This can be attributed to borrowers seeking alternatives to mitigate the impact of increasing interest rates. Meanwhile, the refinance share of mortgage activity has risen to 31.4 percent of total applications.

Breaking down the types of mortgages, the survey indicates that the Federal Housing Administration (FHA) share of total applications has increased to 15.2 percent, while the Veterans Affairs (VA) share has decreased to 10.5 percent. These figures indicate how different categories of potential homeowners are being affected by the changing mortgage landscape.

The survey also provides an insight into the average contract interest rates. The average contract interest rate for 30-year fixed-rate mortgages stands at 7.90 percent for conforming loan balances and slightly lower at 7.78 percent for jumbo loan balances. For 30-year fixed-rate mortgages backed by the FHA, the average contract interest rate has risen to 7.52 percent. Furthermore, the average contract interest rate for 15-year fixed-rate mortgages has climbed to 7.08 percent, while 5/1 adjustable-rate mortgages now average at 6.99 percent.

It is important to note that the MBA’s Weekly Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications and has been conducted on a weekly basis since 1990. The survey holds significant authority in relaying important trends and insights regarding the country’s mortgage industry.

As rising mortgage rates continue to impact the housing market, it remains to be seen how prospective homebuyers and refinancers will adapt to these changes. For now, it is crucial for individuals to carefully evaluate their financial options before proceeding with any mortgage-related decisions.