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Homebuyer demand for mortgages picked up again last week as rates continued their decline from 2022 peaks, according to a weekly lender survey by the Mortgage Bankers Association.
The MBA Weekly Mortgage Applications Survey shows requests for purchase mortgages were up a seasonally adjusted 3 percent last week compared to the week before, but down 39 percent from the same time last year. It was the second consecutive week of growth in purchase loan demand, following a 25 percent jump in applications during the week ending Jan. 13.
While requests to refinance were up 15 percent from week to week, refi applications were down 77 percent from a year ago. Refi requests accounted for 31.9 percent of all mortgage applications, while adjustable-rate mortgage (ARM) loans accounted for 6.5 percent of total loan applications.
Joel Kan
“Mortgage rates declined for the third straight week, which is good news for potential homebuyers looking ahead to the spring homebuying season,” MBA Deputy Chief Economist Joel Kan said in a statement. “Mortgage rates on most loan types decreased last week and the 30-year fixed rate reached its lowest level since September 2022 at 6.2 percent.”
Mortgage rates retreat from 2022 highs
According to loan lock data tracked by Optimal Blue that’s updated daily, rates on 30-year fixed-rate conforming mortgages hit a 2022 high of 7.16 percent on Oct. 24.
“Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market,” Kan said. “Many have been waiting for affordability challenges to subside.”
For the week ending Jan. 20, the MBA reported average rates for the following types of loans:
- For 30-year fixed-rate conforming mortgages (loan balances of $726,200 or less), rates averaged 6.20 percent, down from 6.23 percent the week before. Although points increased to 0.69 from 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also decreased.
- Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $726,200) averaged 5.92 percent, down from 6.08 percent the week before. Although points increased to 0.41 from 0.40 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased.
- For 30-year fixed-rate FHA mortgages, rates averaged 6.22 percent, down from 6.26 percent the week before. Although points increased to 1.10 from 1.05 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased.
- Rates for 15-year fixed-rate mortgages averaged 5.54 percent, down from 5.58 percent the week before. With points decreasing to 0.51 from 0.54 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased.
- For 5/1 ARMs, rates averaged 5.44 percent, up from 5.31 percent the week before. With points increasing to 0.83 from 0.74 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
In their most recent forecast, Fannie Mae economists said they’re expecting gradual home price declines this year to set the stage for mortgage rates to drop and for sales to rebound, but not until 2024.
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