Rates tick down, but applications see minimal movement
Mortgage applications declined slightly last week as elevated mortgage rates continued weighing on home purchase activity, according to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey.
For the week ending March 29, MBA’s Market Composite Index, which measures mortgage loan application volume, decreased 0.6% from the previous week on a seasonally adjusted basis. On an unadjusted basis, the index was down 0.1% week over week.
The Refinance Index fell 2% week-over-week and was 5% lower than the same week a year ago. The Purchase Index fell 0.1% from the prior week and trailed year-ago levels by 13%.
“Mortgage rates moved lower last week, but that did little to ignite overall mortgage application activity,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 30-year fixed mortgage rate declined slightly to 6.91%, while the 15-year fixed-rate decreased to its lowest level in two months at 6.35%.”
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The refinance share of total applications slipped to 30.3% from 30.8% the week before. The adjustable-rate mortgage (ARM) share held steady at 7% of total applications.
Among different loan types, the FHA share dipped to 11.7% from 12% in the prior week. The VA share ticked up to 12.1% from 12%, while the USDA share was unchanged at 0.5%.
“Purchase applications were unchanged overall, although FHA purchases did pick up slightly over the week,” Kan said. “Refinance applications decreased to fall 5% below last year’s pace.”
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With mortgage rates more than double what they were a year ago, home affordability has deteriorated sharply. Many prospective buyers have been priced out, contributing to a sluggish start to the spring homebuying season so far.
However, some economists project mortgage rates could drift lower in the coming months if inflation keeps decelerating, potentially providing some relief for home purchasers. But a meaningful rebound in demand may hinge on a more substantial pullback in borrowing costs.
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