US Mortgage Applications Fall 4.6% With Mortage Rates Highest Since March

The Mortgage Bankers Association showed mortgage applications in the US in the third week of May slumping 4.6%. The 30-year fixed rate increased to 6.69 percent, the highest level since March. The Refinance Index decreased 5 percent from the previous week and was 44 percent lower than the same week one year ago. Homeowners still have reduced incentive as borrowers face an ongoing affordability challenge and a low inventory problem.  

mortgage applicaition

Mortgage Bankers Association for the week ending May 19, 2023. 

  • Mortgage applications w.e. 19 May
  • Market index -4.6% vs. -5.7% prior
  • Purchase index -4.3% vs. -4.8% prior
  • Refinance index -5.4% vs. -7.7% prior
  • 30-year mortgage rate 6.69% v 6.57% prior
  • The refinance share of mortgage activity remained unchanged at 27.4 percent of total applications from the previous week.
  • The adjustable-rate mortgage (ARM) share of activity increased to 6.7 percent of total applications.
United States MBA Mortgage Applications

“Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications,” Mortgage Bankers’ Association’s deputy chief economist, Joel Kan, said.,

United States MBA Mortgage Refinance Index

Rising rates are reducing home-loan refinancings, which powered much of the mortgage market’s boom in 2020 and 2021.

Higher mortgage rates typically slow home-buying activity, and therefore the number of applications. Expectations that the Federal Reserve will raise interest rates this year to control inflation drove up mortgage rates. Home prices continue to push homeownership out of the question for many Americans.

ARMS

  • The Federal Housing Administration‘s (FHA) share increased to 12.5 percent from 12.0 percent the week prior.
  • The United States Department of Agriculture (USDA) share of total applications increased to 0.5 percent from 0.4 percent the week prior
  • The Veterans Affairs‘ (VA) share of total applications increased to 12.5 percent from 12.2 percent the week prior
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.91 percent from 6.01 percent, with points increasing to 0.58 from 0.55 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 5.73 percent from 5.71 percent, with points increasing to 1.19 from 1.10 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

In 2007, just before the housing market crash, there were 13.1 million ARMs, representing 36% of all mortgages. This week the adjustable-rate mortgage (ARM) share of activity increased to 6.7 percent of total applications.

The survey covers over 75 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100. 

Source: Mortgage Bankers Association of America

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