Weekly MBA survey shows broad decline in activity
Mortgage applications declined significantly in mid-April as interest rates climbed to their highest levels in two months, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey released Wednesday.
For the week ending April 18, the Market Composite Index – a key measure of mortgage loan application volume – fell 12.7% on a seasonally adjusted basis compared to the previous week. Unadjusted, the index dropped 11%.
The Refinance Index experienced a sharper 20% decline week over week, although it remained 43% higher than the same period last year. The seasonally adjusted Purchase Index fell 7%, while the unadjusted version declined 6%. Despite the weekly drop, purchase activity remained 6% above year-ago levels.
“Overall mortgage application activity declined last week, as rates increased to their highest level in two months,” said Joel Kan, MBA’s vice president and deputy chief economist. “These higher rates drove a 20% drop in refinance applications, especially for higher balance loans, with the average loan size falling substantially.”
Kan also cited continued economic uncertainty and rate volatility as contributing factors to the 7% reduction in purchase applications, which affected both conventional and government-backed loans.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) rose to 6.90% from 6.81%. Jumbo loans also saw rates increase to 6.90% from 6.84%. Rates for FHA-backed 30-year loans inched up to 6.56%, while 15-year fixed-rate mortgages rose to 6.20%.
Conversely, the rate for 5/1 adjustable-rate mortgages (ARMs) decreased to 6.01% from 6.11%.
The refinance share of total mortgage applications dropped to 37.3%, the lowest since January, down from 41.3% the week prior. The share of ARMs also dipped to 7.5%.
Government loan activity showed mixed movement: FHA applications increased to 16.7% from 15.8%, VA applications declined to 13.4% from 13.7%, and USDA applications fell to 0.4% from 0.5%.
MBA president and CEO Bob Broeksmit noted that with rates now near 7%, “many potential borrowers will likely stay on the sidelines until they have a better idea of the direction that rates, and the economy, are headed.”
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