Mortgage News - Homebuyers’ Purchasing Applications Decline To Lowest Rate In One Month

Homebuyers’ Purchasing Applications Decline To Lowest Rate In One Month

Mortgage News May 26, 2023

According to the Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association (MBA) for the week ending May 12, 2023, there has been a 5.7% decline in mortgage application volume across the country, causing prospective home buyers in the spring season to show caution.

According to the Mortgage Bankers Association (MBA), the Refinance Index experienced an 8% decline compared to the previous week and was 43% lower compared to the same week last year. Additionally, the seasonally adjusted Purchase Index dropped by 4.8% in comparison to the previous week. Moreover, there was a 5% decline in the unadjusted Purchase Index compared to the previous week, with a notable 26% decrease compared to the corresponding week in the previous year.

Joel Kan, the Mortgage Bankers Association’s VP and Deputy Chief Economist, stated that mortgage rates rose last week despite flat Treasury yields, leading to a 310-basis point spread. Consequently, mortgage application activity decelerated, accompanied by a nine-basis point increase in the 30-year fixed rate. This rise propelled the rate to its highest point in two months, reaching 6.57%. Consequently, purchase applications declined by 5%, reaching their slowest pace in a month. This slowdown can be attributed to buyer caution due to rate volatility and limited inventory in various regions of the country.

The proportion of mortgage activity attributed to refinancing declined to 27.4% of total applications from the previous week’s 28%. Concurrently, the proportion of adjustable-rate mortgage (ARM) activity declined to 6.5% of the overall number of applications.

In terms of loan types, the percentage of FHA applications slightly decreased from 12.1% to 12% compared to the previous week. The VA share of total applications also declined from 12.9% to 12.2% during the same period. However, there was no change in the USDA share of total applications, which remained at 0.4% from the previous week.

According to Redfin, the combination of limited inventory and higher mortgage rates is dampening home sales across the country, despite the typically active spring season for homebuyers. During the four weeks ending on May 7, new listings of homes for sale decreased by 19% compared to the previous year, resulting in an unexpected monthly decline in total inventory. Additionally, there was a 16% decline in pending home sales compared to the previous year, indicating a shortage of listings and potential buyers who are deterred by mortgage rates exceeding 6%.

Need a list of insurance agents in your area? Contact Jennifer Swanson at 260-223-9203 or Jennifer@SpecialtyContactDatabases.com

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Homebuyers’ Purchasing Applications Decline To Lowest Rate In One Month

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