Mortgage volumes increase for first time since early March

The recent slide in mortgage activity reversed course, as weekly volumes picked up for the first time since early March. Gains were reported in both refinances and purchases, according to the Mortgage Bankers Association.

The MBA’s Market Composite Index, a measure of mortgage volumes based on surveys of association members, increased a seasonally adjusted 2.5% from the previous week for the period ending April 29. Compared to one year ago, application volumes came in approximately 50% lower on a seasonally adjusted basis.

The Refinance Index inched up 0.2%, after falling for seven straight weeks. The recent spike in interest rates — up more than 1% over two months — has brought refinances down by 49%, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting. Last week’s refinance activity was 71% below levels from the same seven-day time frame one year ago. 

The seasonally adjusted Purchase Index also increased 4% week over week, with both conventional and government applications contributing to the uptick. “This is potentially a good sign for the spring homebuying season, which has seen a slow start thus far,” Kan said in a press release. 

But weekly purchase volumes were still 11% below on a seasonally adjusted basis from where they stood a year ago.

As applications picked up, the average loan size among them decreased, with mean amounts for purchase, refinance and combined volumes all trending downward for the third straight week. On an overall basis, the average fell 0.3% to $392,300 from $393,300 seven days earlier. The mean refinance amount dropped to $283,600, down 2% from $289,700 reported during the previous weekly period.

And after hitting record-highs several times early this year, the average purchase-loan size eased to $448,100 from $449,100 seven days earlier, an 0.2% drop. While slight, the recent moderation in the mean size reflects similar data found in other research, offering some potential relief to buyers if the trend persists. But the purchase average is still almost 12% higher than where it was at the end of 2021, with consumers now facing additional obstacles in affordability.

“The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments,” Kan said. 

The dramatic drop in refinances this year has led their share of applications relative to overall volume to shrink as well. Refinances accounted for only 33.9% of all new applications, down from 35% a week earlier. Adjustable-rate mortgages maintained their same share from the previous week at 9.3%

Applications backed by federal programs saw a weekly increase, as did their percentage relative to overall activity. The Government Index rose nearly 5% on a seasonally adjusted basis. 

The share of loans backed by the Federal Housing Administration accounted for 11.1% of volume, up from 10.6% the prior week. Department of Veterans Affairs-sponsored mortgage applications made up 10.3% of the total, inching up from a 10.2% share a week earlier. But loans coming via programs administered by the U.S. Department of Agriculture took a 0.4% share compared to the previous reporting period, when it was 0.5%.

Average interest rates among MBA members moved minimally last week, with some edging lower, after several recent periods when every category increased by double-digit basis points. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming balances below $647,200 decreased to 5.36% from 5.37% seven days earlier.

The contract rate for 30-year fixed jumbo loans with nonconforming balances greater than $647,200 averaged 4.92%, a 3-basis-point climb from 4.89% week over week.

The average rate for the contract FHA-backed 30-year fixed mortgage fell back to 5.27%, down from 5.29% the prior week. 

The contract 15-year fixed-rate mortgage came in with an average interest rate of 4.68%, unchanged from the previous weekly period.

The average for contract 5/1 adjustable-rate mortgages decreased on a weekly basis, dropping 3 basis points to 4.25% from 4.28%.