Mortgage app volume declines, but jobs data provides silver lining

The Mortgage Bankers Association (MBA) says the pace of mortgage applications have slowed for a fourth consecutive time during the week ended September 2. The seasonally adjusted MBA Market Composite Index, a measure of application volume, fell 0.8% heading into the Labor Day long weekend. On an unadjusted basis, the index was down 2% from the previous week.

The refinancing index fell by another 1%, putting it down 83% from the same week in 2021. The refinance share of mortgage activity fell to 30.7% of total applications, from 30.3% the previous week. At this point last year, refinancing accounted for 66.8% of the total application volume.

The buy index decreased by 1% on a seasonally adjusted basis and 3% before adjustment compared to the previous week. It was 23% less than the same week in 2021.

“Mortgage rates have risen over the past week as markets continued to reassess the outlook for the economy and the trajectory of monetary policy, with expectations that short-term rates will move and stay higher for longer. “said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “With the 30-year fixed rate hitting its highest level since mid-June, the volumes of purchase and refinance loan applications have fallen. Recent economic data will likely prevent any significant decline in short-term mortgage rates, but the strong labor market depicted in the August data should support housing demand. There is no sign of a rebound in purchase requests yet, but the robust labor market and an increase in housing inventories should lead to an eventual increase in buying activity.”

Highlights from the weekly MBA Mortgage Application Survey:

• FHA’s share of total claims increased from 13.0% to 13.3%, while VA’s share increased from 11.1 to 10.8%. The USDA share was unchanged from the previous week at 0.6%.
• The average loan price increased from $368,900 to $367,600 while the purchase loan amount increased from $409,100 to $411,300.
• The average contractual interest rate for 30-year conforming Fixed Rate Mortgage (FRM) loans increased from 5.80% to 5.94%, with points rising from 0.71 to 0.79.
• The 30-year jumbo FRM loan had an average rate of 5.46% with 0.40 points. The previous week, the rate was 5.32% with 0.48 points.
• The FHA-backed 30-year FRM rate rose 4 basis points to 5.61%. Points averaged 1.06, down from 1.09.
• There was a jump of 13 basis points in the 15-year FRM rate with points averaging 0.86.
• The share of adjustable rate mortgage (ARM) activity remained unchanged at 8.5% of total applications, while the average 5/1 ARM rate fell from 4.78% to 4.81% . Points averaged 0.88, down from 0.61 a week earlier.