Mortgage app numbers plummet after interest rates surge

recent interest rates rise Leaves mark on home loans as application volumes rise Second consecutive week of declinesIt was the largest drop in a year, according to the Mortgage Bankers Association.

The MBA’s seasonally adjusted Market Composite Index, which measures application activity based on a survey of members of industry groups, plunged 10.6% on a weekly basis, the biggest drop since mid-February last year. The latest decline followed a revised 3.3% decline. Compared to the previous survey period, volumes fell 7.9% compared to the same seven-day period in 2023.

The recent decline in lending activity has coincided with a steady increase in mortgage rates, which has reversed a sizable Decrease in early winter This resulted in increased loan volumes for much of January. The average compliance rate among MBA members surged 28 basis points in three weeks, rising back above 7%.

“Mortgage applications are down, and refinance applications are down even more,” Mike Fratantoni, senior vice president and chief economist at MBA, said in a news release.

Balance lower than 30-year loan rate Qualifying amount is $776,550 Rates rose 19 basis points across most markets, with the average rate rising to 7.06% from 6.87% seven days ago. For 80% loan-to-value applications, the borrower purchase rate edged up from 0.65 to 0.66.

Fratantoni added that the latest rate changes temporarily dashed hopes that housing inventory and buying activity could sustain the growth seen earlier this winter.

“Potential homebuyers are very sensitive to these rate changes as rising interest rates and rising house prices in this market with limited supply create affordability constraints,” he said.

Last week, the seasonally adjusted purchasing index fell 10.1% from the previous survey period and was revised down 3.2%. Purchase volumes were also down 13% compared to a year ago.

Recent interest rate changes have also contributed to a decline in new listings, according to a report from Redfin last week. The number of new homes on the market fell a seasonally adjusted 1.2% in January, the first decline since June last year. Like MBA, Redfin brokers said interest rate levels are hampering market activity.

“Many of my clients are paying close attention to what the Fed says. In December, when the Fed hinted that it would lower interest rates, buyers and sellers alike started to wait and see,” said Hal Bey, a Redfin broker in Bellevue, Wash. Hal Bennett said. Press release.

“But now some people are getting cold feet because the Fed says Rate cut may come later than expected”.

Meanwhile, in the latest survey, the MBA refinancing index fell even more, reaching 11.4%, with transaction volume remaining flat year-on-year. Refinancing relative to total activity also fell back to 32.6% from 34% seven days ago. .

But adjustable-rate mortgages accounted for a larger share of volume, rising to 7.4% from 7% a week earlier. As fixed interest rates rise, Interest in adjustable rate options generally rises At the same time, borrowers are also looking for ways to lower their monthly down payments.

On a seasonally adjusted basis, the government index slowed by 16.8%, a decline even greater than the overall figure. There was a similar contraction in the share of federally funded activities.

Applications supported by the Federal Housing Administration accounted for 13.2% of activity, down from 13.5% a week ago. Loans guaranteed by the Department of Veterans Affairs shrunk to 12.1% from 13.3%. But the share of USDA-sponsored mortgages that managed to squeeze rose to 0.5% from 0.4% in the last survey.

Similar to conforming mortgages, average rates increased across all other loan categories tracked by MBA, with the 30-year jumbo average jumping to 7.16% from 7% the previous week. The score for an 80% LTV ratio loan increased from 0.39 to 0.45.

The average contract rate on 30-year FHA-backed mortgages surged 23 basis points to 6.91%. Seven days ago, the FHA average rate was 6.68%. Borrowers typically use 1.03 basis points, up from 0.89 basis points in the last survey.

The fixed interest rate for 15-year loan contracts increased slightly by 8 basis points, from 6.53% in the last survey to an average of 6.61%, and fell from 0.94 to 0.77.

The average weekly interest rate on 5/1 adjustable-rate mortgages increased from 6.3% to 6.37%. The borrower score was 0.71, compared with 0.60 a week ago. The loan starts with a five-year fixed rate and then becomes a variable rate.

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