Mortgage Applications Showing Signs Of Revival?

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Mortgage Applications Showing Signs Of Revival?

Jul 6, 2023 | News | 0 comments

Considering the positive findings from yesterday’s robust assessment of new home sales and the slightly enhanced report on pre-owned home sales, the volume of mortgage applications may suggest that the spring housing market hasn’t completely disappeared. It could be merely experiencing a minor delay.

Mortgage applications rose for the third week in a row, though not enough to offset the significant deficit. The Mortgage Bankers Association reported a 3.0 percent increase in the Market Composite Index, reflecting application volume. Despite the shorter workweek due to Juneteenth, the index rose on a seasonally adjusted basis but dropped 8.0 percent on an unadjusted basis compared to the previous week.

The Purchase Index, after adjusting for seasonal factors, experienced a consecutive gain of 3.0 percent, although it remained 21.0 percent lower compared to the corresponding week from the previous year. Similarly, the Refinance Index saw a 3.0 percent increase from the previous week, but it was 32.0 percent lower than the same week one year ago. On an unadjusted basis, both the Purchase and Refinance Indices declined by 8.0 percent.

The portion of refinance applications in relation to the overall total stood at 27.2 percent, slightly higher than the previous week’s share of 26.9 percent.

MBA’s Vice President and Deputy Chief Economist, Joel Kan, remarked that mortgage rates experienced varying changes among different loan types in the previous week. Specifically, the 30-year fixed rate saw a slight uptick, reaching 6.75 percent. Moreover, the gap between jumbo and conforming rates widened to 16 basis points, marking the third consecutive week where the jumbo rate surpassed the conforming rate. In terms of comparison, Kan highlighted that, on average, from May 2022 to May 2023, the jumbo rate maintained a roughly 30 basis points lower position compared to the conforming rate.

Despite a three-week consecutive increase, purchase applications still remained more than 20 percent lower compared to the previous year, although reaching the highest level of activity since early May. The surge in purchase activity has been primarily fueled by new home sales as buyers seek alternatives outside the existing home market. However, the existing-home sales market continues to face constraints due to a shortage of inventory, as many sellers opt to retain their low-rate mortgages.