Mortgage application activity last week experienced a downturn, according to new data from the Mortgage Bankers Association (MBA).
The Market Composite Index, the trade group’s measure of mortgage loan application volume, was down 4.4% on a seasonally adjusted basis from one week earlier, although the unadjusted index increased 6% compared with the previous week.
The seasonally adjusted Purchase Index was 5% lower while the unadjusted index was 6% higher – the latter was also 22% lower than the same week one year ago. The Refinance Index was down by 4% and was also 30% lower than the same week one year ago; the refinance share of mortgage activity inched up to 27.4% of total applications from 27.2% in the previous week.
Among the federal programs, the FHA share of total applications increased to 13% from 12.9% the week prior while the VA share of total applications decreased to 11.7% from 12.2% and the USDA share of total applications remained unchanged at 0.4%.
“Mortgage applications fell to their lowest level in a month last week as rates for most loan types increased,” said Joel Kan, MBA’s vice president and deputy chief economist. “Purchase applications decreased for the first time in a month, as homebuyers remained sensitive to rate changes. Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country. However, the average loan size for a purchase application declined to $423,500 – its lowest level since January 2023. This was likely driven by reduced purchase activity in some high-price markets and more activity in some of the lower price tiers as buyers searched for more affordable options.”
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