Mortgage market faces mixed signals in latest MBA survey
This week’s mortgage application data revealed a barely noticeable overall increase, with a mere 0.1% rise from the previous week – but the real story appears to the impact of rising rates on purchase demand.
Purchase applications were down almost 5% to the lowest level since the end of February. However, refinance applications were up 10%, driven largely by a surge in VA loans used to refinance existing mortgages.
The refinance share of total applications also increased to 33.3%, suggesting borrowers are taking advantage of still-favorable rates to potentially lower their monthly payments.
Overall, seasonally adjusted mortgage loan application volume edged up 0.1% in the week ending April 5, according to the Mortgage Bankers Association’s (MBA) latest report. Unadjusted, the increase stood at 0.2% compared with the week before.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased 10 basis points to 7.01% – the highest in over a month.
“Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts,” said Joel Kan, MBA’s vice president and deputy chief economist. “Inflation remains stubbornly above the Fed’s target, and the broader economy continues to show resiliency. Unexpectedly strong employment data released last week further added to the upward pressure on rates.”
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Meanwhile, the adjustable-rate mortgage (ARM) share of activity receded to 6.9% of total applications.
Government-backed loan programs also saw shifts, with the FHA share of total applications rising to 12.1%, from 11.7%, and the VA share of total applications increasing to 14% from 12.1%. TUSDA share of total applications dipped one basis point to 0.4%.
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