Mortgage activity has increased for the third consecutive week, according to the Mortgage Bankers Association’s (MBA) latest report. According to the MBA, there was a 3% rise in the Market Composite Index that measures mortgage loan application volume, both seasonally adjusted and unadjusted. Additionally, the Refinance Index experienced a 5% increase from the previous week, but this was still 68% lower than the same period in 2022. The proportion of refinancing applications increased to 28.6%, compared to 28.2% in the previous week.
The Purchase Index also increased by 2% from the previous week on a seasonally adjusted basis and 3% on an unadjusted basis. However, purchase activity remains 36% lower than the same period last year.
Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributed the decline in mortgage rates to the drop in Treasury yields, which was caused by uncertainty over the health of the banking sector and broader economic concerns. The 30-year fixed rate mortgage dropped to 6.48%, the lowest level in a month. Increased market volatility in MBS (Mortgage-Backed Securities) has prevented mortgage rates from decreasing as significantly as Treasury rates. Compared to the typical spread of 180 basis points, the difference between the 30-year fixed and 10-year Treasury is currently wide at approximately 300 basis points.
The report also showed that loan sizes increased for all mortgages, rising from $382,000 to $389,000. Purchase loans saw an average increase of $7,100, reaching $437,700. Additionally, the FHA share of total applications decreased to 12.3% from 12.9%, and the VA share of total applications dipped to 11.7% from 11.9%, while the USDA share remained unchanged at 0.5%.
The MBA also revealed that the average contract rate for a 15-year fixed-rate mortgage dropped from 6.14% to 6.02%, along with a decrease in points from 0.77 to 0.60. During the reported period, there was a decrease in the 5/1 adjustable-rate mortgage (ARM) rate by 11 basis points to 5.58%, with corresponding points dropping to 0.75 from 0.87. Despite this, ARM applications only saw a slight increase from the previous week, comprising 8.6% of total applications.