Purchase Apps Drop Almost 40% YOY

Mortgage News February 27, 2023

According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 10, 2023, mortgage rates moved slightly upward last week after the Fed enacted another increase in interest rates, and a surprising strong jobs report. As a result of this, mortgage application volume decreased 7.7% week-over-week.

There is a decrease in MBA’s Refinance Index by 13% from the previous week and was down by 76% from the same week one year ago. There is also a decrease in the seasonally adjusted Purchase Index by 6% from one week earlier. Compared with the previous week, there is a 5% decrease in the unadjusted Purchase Index and was down by 43% from the same week one year ago.

Joel Kan, MBA’s VP and Deputy Chief Economist, noted that the refi share of mortgage activity decreased to 32% of total applications. down from 33.9% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9% of total applications.

According to Kan, the number of purchase applications dropped to its lowest point since this year’s beginning and was down over 40% from a year ago. There is still a great deal of sensitivity among potential buyers when it comes to current mortgage rates, which are higher than they were last year and have reduced the purchasing power of buyers.

Despite the economic downturn, Redfin reports that 31.2% of December’s U.S. home purchases were all cash. That’s up from 28.8% a year ago, but lower than the eight-year high of 31.9% in November 2022.

As a percent of total applications, the FHA share increased to 12.6% from 11.9% a week earlier, and the VA share decreased to 12.6%, down from 13.4% a week earlier. There was no change in the USDA’s share of total applications from the previous week, which was 0.6%.

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