Mortgage Applications Rise Marginally Despite Increased Rates

Mortgage News March 21, 2023

Mortgage applications saw an increase for the first time in three weeks during the period ending on March 3, despite a slight increase in rates. The degree of change is somewhat obscured by revisions to nearly two months of data from earlier in the year. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of mortgage loan application volume, increased 7.4% on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the index was up 9%.

The Refinance Index rose 9% from the previous week but was 76% lower than the same week in 2022. For mortgage activity, the refinance share rose from 28.7% to 28.9% of total applications. Meanwhile, the Purchase Index was 7% higher than the previous week on a seasonally adjusted basis and up 9% before adjustment. Purchase volume has declined 42% on an annual basis.

Joel Kan, Vice President and Deputy Chief Economist at the MBA, stated that the 30-year fixed rate mortgage continued to rise last week, reaching 6.79%, the highest level since November 2022, and 270 basis points higher than a year ago. Despite the increase in mortgage rates, there was a slight increase in mortgage applications, although it was in comparison to two weeks of declines, including a holiday week. According to Kan, many borrowers are holding off on applying for mortgages, waiting for rates to decrease.

Despite the increase in rates, the MBA’s report suggests that some borrowers are still willing to apply for mortgages. However, the comparison with last year’s application indices highlights the significant decline in purchase and refinance activities. The increase in rates may deter some borrowers from applying for mortgages, but the market’s response to the current situation remains uncertain.

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