The Market Composite Index, a measure of mortgage loan application volume, increased 2.3% on a seasonally adjusted basis from one week earlier, according to data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Applications Survey for the week ending January 14. On an unadjusted basis, the index increased 3% compared with the previous week.
“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. The 30-year fixed rate reached 3.64 percent and has increased more than 30 basis points over the past two weeks. FHA and VA refinance declines drove most of the refinance slowdown,” states Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Despite the increase in rates, purchase applications jumped almost 8 percent, with conventional purchase applications accounting for much of the stronger activity.”
The Refinance Index decreased 3% from the previous week and was 49% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8% from one week earlier. The unadjusted Purchase Index increased 14% compared with the previous week and was 13% lower than the same week one year ago.
“The average loan size for a purchase application set a record at $418,500,” continues Kan. “The continued rise in purchase loan application sizes is driven by high home-price appreciation and the lack of housing inventory on the market – especially for entry-level homes. The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.”
The refinance share of mortgage activity decreased to 60.3% of total applications from 64.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.8% of total applications.
The FHA share of total applications decreased to 9.3% from 9.9% the week prior. The VA share of total applications decreased to 10% from 11.4% the week prior. The USDA share of total applications remained unchanged from 0.4% the week prior.
