Mortgage Applications Fell Last Week As Interest Rates Increased
Decline in Mortgage Applications
Mortgage applications fell last week, as reported by the Mortgage Bankers Association’s (MBA) most recent Weekly Mortgage Applications Survey. The Market Composite Index for the week ending September 22, 2023, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from the previous week. When unadjusted, the Index shows a decrease of 2 percent. Refinance activity was down 1 percent week-over-week, and was 21 percent lower compared to the same week one year ago.
Higher Mortgage Rates
As explained by Joel Kan, MBA’s Vice President and Deputy Chief Economist, "Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week." Specifically, the 30-year fixed mortgage rate has risen to 7.41 percent, the highest since December 2000, and the 30-year fixed jumbo mortgage rate to 7.34 percent, setting a record in the history of the jumbo rate series since 2011. This substantial increase in rates has driven a decline in overall applications as prospective homebuyers are feeling the pressure of higher mortgage payments, and current homeowners have little incentive to refinance.
Other Significant Trends
The refinance share of overall mortgage activity increased slightly to 31.9 percent of total applications. Additionally, the adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications.
FHA share of total applications decreased to 14.1 percent, while VA applications shrank to 10.9 percent. However, the USDA share of total applications saw a slight increase to 0.5 percent from 0.4 percent the previous week.
The mortgage market is currently experiencing a decline in applications, driven primarily by the significant increase in mortgage rates. Both prospective homebuyers and current homeowners are impacted, with increasing challenges in the already difficult purchase market and decreased incentives to refinance.