Activity in the housing market is beginning to decrease overall as rates rise, but this is especially true for mortgage refinances.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier, according to the Weekly Mortgage Applications Survey from the Mortgage Bankers Association. On an unadjusted basis, the index decreased 3 percent compared with the previous week.
“Purchase and refinance applications declined, with most of the pullback coming earlier in the week when rates were higher,” said Joel Kan, MBA associate vice president of economic and industry forecasting, in a statement. “Treasury yields started last week high – close to the prior week’s level at over 1.7 percent – before decreasing 6 basis points.”
Joel Kan
“Refinance activity has now decreased for nine of the past 10 weeks, as rates have gone from 2.92 percent to 3.27 percent over the same period,” Kan said. “Last week’s index level was the lowest in over a year, as mortgage rates continue to trend higher. Many borrowers have either already refinanced at lower rates or are unwilling – or unable – to refinance at current rates.”
The Refinance Index decreased 5 percent from the previous week and was 31 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 51 percent higher than the same week one year ago.
“The third straight week of declining purchase activity is a sign that rising home prices and tight supply is constraining home sales – especially in the lower price tiers,” Kan said. “Purchase applications were still above last year’s pandemic-impacted low point, but fell behind the level of activity seen the same week in 2019.”
Refinances remain the main driver of mortgage applications but decreased to 59.2 percent of total applications from 60.3 percent the previous week. The adjustable-rate mortgage share of activity decreased to 3.6 percent of total applications.
The FHA share of total applications increased to 10.8 percent from 10.2 percent the week prior. The VA share of total applications decreased to 12.1 percent from 13.8 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.
