Total mortgage application volumes declined last week as refinance activity slowed amid a slight rise in mortgage rates, but purchase mortgage borrowers exhibited resolve.
The Mortgage Bankers Association’s Market Composite Index, a measure of mortgage loan application volume, slipped 1.6% on a seasonally adjusted basis over the week ending April 24, a nearly 9.5% swing from the previous week.
Though mortgage rates increased slightly last week, according to MBA data, the seasonally adjusted purchase component index rose 1%. The unadjusted purchase index was 21% higher than a year ago.
“After a brief pause,” said Mike Fratantoni, chief economist at the MBA, “in part because of the elevated geopolitical uncertainties, potential homebuyers certainly appear to be moving forward this spring and taking advantage of the more favorable inventory conditions in most parts of the country.”
After refinance activity plunged in early March on spiking rates, purchase applications posted annual declines for two consecutive weeks to kick off April, suppressed by higher borrowing costs and economic uncertainty stemming from the Iran war. Mortgage rate-lock data indicated purchase demand remained strong in March despite the conflict.
MBA data shows average mortgage rates for 30-year fixed-rate loans slightly increased to 6.37% last week from 6.35%, 6.42%, 6.51% and 6.57% over the preceding weeks.
Improved homebuying sentiment was also captured by what The Conference Board called a “mild recovery” in its analysis of consumer sentiment in April, published Tuesday. Nevertheless, the share of consumers who expect interest rates to be higher a year from now rose to almost 50%.
The MBA’s refinance index fell 4%, however, on the stall in downward momentum in mortgage rates but remained 51% higher than a year ago. The refinance share of overall application activity declined to 42.5% from 44.2% the previous week.
The share of applications for mortgages insured by the Federal Housing Administration (FHA) declined 1% over the week to 17.2%, while the share of applications for mortgages backed by the Department of Veterans Affairs was unchanged at 15%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA was essentially flat at 6.09% from 6.1% the previous week and 6.14% the week before.
