Mortgage application activity cools down for first time in 2024

The Mortgage Bankers Association said new loan application activity fell for the first time this year as a drop in purchases offset an increase in refinances.

The MBA Market Composite Index, which measures applications based on a survey of industry group members, fell a seasonally adjusted 7.2% from the previous seven days. The index fell after four consecutive weeks of gains, Includes 3.7% growth in previous surveyIncreased activity in early 2024 coincided with the recent slowdown in interest rates, but transaction volumes were down 13.1% compared to the same period last year.

Joel Kan, MBA vice president and deputy chief economist, said the index fell as homebuyers largely remained on the sidelines as mortgage rates were flat last week. The average contract interest rate for 30-year fixed mortgages with balances below the qualifying amount was unchanged week over week at 6.78%. But the average interest rate for an 80 per cent loan-to-value mortgage edged up to 0.65 from 0.63.

“The low supply of existing housing has limited the choices of potential buyers and caused housing prices to rise, resulting in a one-two punch that continues to restrict home buying activity,” Kan said in a press release.

The seasonally adjusted purchasing index fell 11.4% from seven days ago, and transaction volume also fell 18.8% from the same period last year.

But despite the recent weekly economic slowdown, a pullback in interest rates in late 2023 could help spur homebuying interest as borrowers Gained significantly increased purchasing power Redfin found that MBA surveys over the past three months showed that the 30-year rate peaked at 7.9% that month.

However, growing demand has also pushed up the price of available supply. The average purchase loan size increased 4.3% last week to $444,100, the highest level since May last year, compared with $425,100 in the last survey.But industry stakeholders say they expect origin trends to improve As the spring buying season begins.

MBA’s Refinancing Index did the opposite, rising 1.6% from seven days ago. Refinances were up 3% compared to the same period last year. Refinances also rose to 34.2% of total activity from 32.7% the previous week.

However, the number of applications for federal funding fell, and the government index slowed more than traditional activity. The number of loans backed by the Federal Housing Administration fell to 13.8% from 14.1% a week ago. The portion of applications filed through the Department of Veterans Affairs fell back to 13.3% from 13.7% sequentially, while similar mortgages guaranteed by the USDA also accounted for 0.4%.

While qualifying rates were flat, the average 30-year rate on fixed jumbo mortgages also remained unchanged from the previous week at 6.94%. The score for an 80% LTV loan dropped slightly from 0.46 to 0.45.

The average interest rate on 30-year fixed-contract FHA loans jumped 10 basis points to 6.61% from 6.51%. Borrowers typically use 0.79 points, down from 0.87 points in the previous survey period.

The 15-year fixed contract average was 6.34%, up slightly from 6.31% a week ago. Points also fell from 0.59 to 0.53.

The average interest rate on a 5/1 adjustable-rate mortgage rose one basis point to 6.23% from 6.22% seven days ago. The number of points used to purchase the interest rate on loans, which are initially fixed for a five-year period, increased from 0.49 to 0.59.

Meanwhile, the share of applications for adjustable-rate mortgages increased to 6.6% from 6.3% in the previous weekly survey.

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