Mortgage application volume decreased 8.5% on a seasonally adjusted basis for the week ending Jan. 23, as a rise in interest rates tamped down refinancing activity, according to the latest data from the Mortgage Bankers Association (MBA). 

The decline from the prior week was driven largely by a sharp contraction in financing. The Refinance Index fell 16% from the previous week, highlighting the market’s continued sensitivity to rate volatility in the 6% range. Despite the weekly slump, purchase demand remained 18% higher than the same period last year.

“Mortgage rates increased for the first time in a month, and as expected, refinance applications fell by 16%,” said Joel Kan, MBA’s vice president and deputy chief economist, in commentary accompanying the release. He added that the 30-year fixed rate “was the highest in three weeks at 6.24%.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) rose to 6.24% from 6.16%, with points increasing one basis point for 80% loan-to-value ratio loans. Consequently, the refinance share of total mortgage activity decreased to 56.2%, down from 61.9% the previous week.

However, not all refinancing activity retreated. Kan noted that Federal Housing Administration refinances “bucked the overall trend and increased,” driven by FHA rates remaining approximately 20 basis points lower than conforming rates. The FHA share of total applications subsequently increased to 18.6% from 15.9% the prior week. 

Purchase applications showed mixed results on a weekly basis but remained strong compared to last year. The seasonally adjusted Purchase Index decreased 0.4% from one week earlier, while the unadjusted index dropped 4%.

The survey results included an adjustment for the Martin Luther King Jr. Day holiday.