The MBA’s Market Composite Index, a measure of mortgage loan application volume, decreased 1.3% on a seasonally adjusted basis from the week prior. On an unadjusted basis, the Index decreased 0.9%.
The refinance index also decreased 2% from the previous week and the share of refinanced loans decreased to 60.2%, the lowest it has been since June 2020. The decline in refinance activity is attributed to rising interest rates, which have increased significantly in recent weeks.
The decline in purchase application volume is more concerning, as this indicates that fewer buyers are entering the housing market. The decrease in purchase applications is more than the 5.6% decrease seen in the same period last year. This could be due to potential home buyers feeling overwhelmed and uncertain about their finances in the midst of the ongoing economic crisis.
The purchase application index currently sits at 90.7 and is lower than it was during the same period last year. It has also gone down for six consecutive weeks, which suggests that the decrease was not just a one-time event.
The decline in both refinance and purchase application volume indicates that the housing market is still feeling the effects of the pandemic-induced recession. With interest rates on the rise and homeowners feeling uncertain about the future, it’s likely that the purchase mortgage application rate will remain low until economic conditions improve.
Summary:
The recently released purchase mortgage application report from the Mortgage Bankers Association (MBA) shows that applications for home purchases have declined to their lowest level in over a year. The MBA's Market Composite Index, a measure of mortgage loan application volume, decreased 1.3% on a seasonally adjusted basis from the week prior. Refinance activity also decreased 2%, with the share of refinanced loans decreasing to 60.2%, the lowest it has been since June 2020. This is likely due to rising interest rates in recent weeks.
The purchase application index is currently sitting at 90.7, lower than it was during the same period last year, and has decreased for six consecutive weeks. This suggests that the decline is more permanent than a one-time event, and is likely due to potential buyers feeling overwhelmed and uncertain about their finances and the ongoing economic crisis.
These decreases in both purchase and refinance application volumes point to the fact that the housing market is still feeling the negative effects of the pandemic-induced recession. Until economic conditions improve, it is likely that the purchase mortgage application rate will remain low.
This article was contributed on Sep 21, 2023
