WASHINGTON — Mortgage applications fell sharply last week as interest rates climbed to their highest level since late summer, according to data released by the Mortgage Bankers Association.
The MBA said its Market Composite Index, a measure of mortgage application volume, dropped 10.4% on a seasonally adjusted basis for the week ending March 27. On an unadjusted basis, applications declined 10% from the previous week.
Refinancing activity led the decline, with the Refinance Index falling 17% from the prior week, though it remained 33% higher than the same week a year ago. Purchase applications were more resilient, with the seasonally adjusted Purchase Index slipping 3% week over week. On an unadjusted basis, purchase applications fell 2% but were 1% higher than a year earlier.
“The 30-year mortgage rate, now at 6.57%, reached its highest level since last August and is up half a percentage point from just one month ago,” Mike Fratantoni, the MBA’s senior vice president and chief economist, said in a statement. “Refinance application volumes declined sharply again last week, dropping 17%, and are down more than 40% compared to last month.”
Increased Inventory is Helping
Fratantoni added that while higher rates continue to weigh on demand, increased housing inventory in some markets is helping offset the impact for prospective buyers. He also noted that applications for government-backed loans, including those from the Federal Housing Administration and Department of Veterans Affairs, are holding up better than conventional loans.
Still, he said rising rates and broader economic uncertainty are likely affecting buyer confidence.
The Data Points
According to the MBA:
- The refinance share of total mortgage activity fell to 45.3% from 49.6% the previous week. Adjustable-rate mortgages accounted for 8.0% of total applications, down from the prior week.
- By loan type, the FHA share of applications edged down to 19.5% from 19.7%, while the VA share rose to 16.1% from 15.9%. The USDA share was unchanged at 0.5%.
Interest Rate Data Points
Interest rates increased across most loan categories.
- The average rate for a 30-year fixed-rate mortgage with conforming loan balances rose to 6.57% from 6.43%
- Rates for jumbo loans increased to 6.59% from 6.45%.
- FHA-backed 30-year loans climbed to 6.25% from 6.15%.
- Rates on 15-year fixed mortgages also rose, increasing to 5.89% from 5.83%. In contrast, the average rate for 5/1 adjustable-rate mortgages declined to 5.67% from 5.75%.
The MBA survey is conducted weekly and covers more than 75% of all U.S. retail residential mortgage applications.
