Mortgage application volume remained virtually flat last week, decreasing 0.3% on a seasonally adjusted basis for the week ending Feb. 6, according to a survey from the Mortgage Bankers Association (MBA). The stagnation in overall activity comes as the average contract interest rate for 30-year fixed-rate mortgages held steady at 6.21%, according to MBA data.
Despite the pause in rate volatility, affordability challenges continue to dictate borrower strategies. With the 30-year fixed rate was unchanged, prospective homebuyers and those seeking to refinance are increasingly pivoting toward Federal Housing Administration (FHA) loans and adjustable-rate mortgages (ARMs) to secure lower payments, even as conventional loan applications retreated.
The MBA’s Market Composite Index, a measure of mortgage application volume, decreased 0.3% on a seasonally adjusted basis from the previous week. On an unadjusted basis, however, the index increased 2% compared with the previous week.
The divergence between loan types and purposes was distinct. The association’s Refinance Index increased 1% from the previous week and is now 101% higher than the same week one year ago.
In contrast, the seasonally adjusted Purchase Index fell 2% from one week earlier. However, on an unadjusted basis, purchase volume showed some resilience, increasing 4% during the week and standing 4% higher than the same week last year.
Joel Kan, MBA’s vice president and deputy chief economist, described last week’s results as a “mixed bag.”
“The 30-year fixed rate was unchanged at 6.21%, and conventional applications declined for both purchases and refinances as borrowers held out for another drop in rates or shifted to other loan types,” he said in remarks accompanying the release.
That shift was evident in the rising market share of government-backed and adjustable-rate loans. ARM loans increased to an 8% share of total applications from 7.5% the previous week. The FHA share of total applications increased to 18.4%, up from 17.8% the week prior, while the Department of Veteran Affairs share rose to 16% from 15.8%. The U.S. Department of Agriculture share of total applications remained unchanged at 0.4%.
“FHA purchase and refinance applications increased, helped partially by the FHA rate declining and remaining 20 basis points lower than the conforming 30-year fixed rate,” Kan noted.
