Aside from the headline ebb and flow of applications, the weekly mortgage application report from the Mortgage Bankers Association (MBA) contained an especially notable detail: During the week that ended Feb. 25, the refinance share of mortgage activity decreased to 49.9% of total applications, down from 50.1% the previous week.
This marks the first time, according to the MBA, that the refinance share of mortgage activity has dipped below 50% since mid-2019. The refi slice of loan activity moved to 50.2% during the week of June 14 that year, up from 49.8% the week prior, and it had stayed there until now.
The refinance component of the MBA’s Market Composite Index, which measures mortgage application volume, was down 56% from the same week one year ago.
“Although there was an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. The 30-year fixed rate rose to 4.15% last week, its highest level since 2019.
Interest rates plunged this week due to impacts of the Russian invasion of Ukraine. Ongoing military conflict could have further effects on rates, with Kan noting that the MBA will “continue to assess the potential impact on mortgage demand from the sharp drop in interest rates this week.”
It’s worth noting that Kan also said that “purchase activity remained weak,” suggesting that the shift in market share reflects the decline in refinances more than a large gain in purchases. Home-price growth remains strong, dissuading many potential buyers and pricing out others. Low supply remains a persistent problem, especially at the entry-level tiers, with Kan observing that a greater share of lending is happening at the higher end of the market.