Individuals across the country chasing the American dream of homeownership helped to push mortgage application volume up by 2.5% for the week ending April 29, compared with the prior week.
The uptick, as measured by the Mortgage Bankers Association‘s (MBA’s) Market Composite Index, was propelled primarily by purchase-application activity, as rates remain elevated, hovering in the low 5% range and a drag on refinance volume.
The seasonally adjusted purchase index rose 4.1% from the prior week, fueled by increased conventional, Federal Housing Administration (FHA) and Veterans Affairs (VA) loan-application volume. That’s a good sign for the spring homebuying season, which has seen a slow start, according to the MBA. Meanwhile, refinance applications increased by only 0.17% from the prior week.
Compared to a year ago, overall applications declined 49.7%. Interest in purchases fell 10.9%, while refinances dropped 70.7% from the prior period.
“Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.36% this week, down from 5.37% the previous week, but still 2 percentage points higher than a year earlier. The average contract interest rate for 30-year fixed-rate mortgages with jumbo-loan balances (greater than $647,200) jumped to 4.92 percent, up from 4.89 percent the prior week.
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“The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments,” Kan said.
The refinance share of all applications dipped to 33.9%, down from 35% the previous week. The MBA report also noted that the adjustable-rate mortgage share remained unchanged at 9.3% of total applications.
The FHA share of total applications increased to 11.1% from 10.6% a week earlier, and the share of VA applications rose slightly to 10.3% from 10.2%. The USDA share dropped from 0.5% to 0.4%.
The survey, conducted since 1990, covers over 75% of the retail residential mortgage applications.
