Mortgage application volume plummeted 8.8% during the week ended April 14, as rates crept up from the week prior, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances dropped 6% compared with the previous week and were down 56% compared with the same week a year earlier.
Applications for purchases decreased 10% compared with the previous week and were down 36% compared with a year ago.
“Last week’s increase in mortgage rates prompted a pullback in application activity,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes. The 30-year fixed rate increased 13 basis points to 6.43 percent, which led to purchase applications declining 10 percent.”
“Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act,” Kan adds. “The 10-percent drop in FHA purchase applications, and the increase in the average purchase loan size to its highest level in a month, are other indications that first-time buyers have pulled back. The spread between the jumbo and conforming 30-year fixed rates widened slightly last week to 15 basis points, but this was a much tighter spread compared to the past year. As banks reduce their willingness to hold jumbo loans, we expect this narrowing trend to continue.”
The refinance share of mortgage activity increased to 27.6% of total applications, down from 27.0% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 6.3% of total applications.
The average rate for a 30-year fixed-rate mortgage, based on closings, was 6.43%, up from 6.30%.
Photo: Scott Graham