Higher interest rates in recent weeks have made a dent in housing activity, bringing down mortgage demand.
Mortgage applications decreased by 5.6% on a seasonally adjusted basis during the week ending Feb. 23, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
“Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement.
“Purchase activity is running 12% behind last year’s pace, but our January Builder Application Survey results showed that applications to buy new homes were up 19% compared to last year. This disparity continues to highlight how the lack of existing inventory is the primary constraint to increases in purchase volume. However, mortgage rates above 7% sure don’t help.”
“Mortgage rates were little changed last week, with the 30-year conforming rate declining slightly to 7.04% but remaining about a quarter percentage point higher than the start of the year,” Fratantoni added.
Purchase applications decreased by 5% from one week earlier on a seasonally adjusted basis, while refinance applications fell by 7% in the same period. Last week, refis accounted for 31.2% of all applications, down from 32.6% the previous week.
The 30-year fixed-rate mortgage averaged 6.90% as of Feb. 22, according to Freddie Mac’s Primary Mortgage Market Survey. As of Wednesday, the 30-year fixed rate on HousingWire’s Mortgage Rates Center, powered by Polly, stood at 7.26%.
The MBA survey shows that the average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) decreased to 7.04%, down from 7.06%% the week before. Meanwhile, rates on jumbo loans (greater than $766,550) increased to 7.20%, up from 7.16%.
The Federal Housing Administration (FHA) share of total applications decreased to 13% last week, down from 13.2% the week prior. The U.S. Department of Veterans Affairs (VA) share declined to 11.7%, down from 12.1% the week before. And the U.S. Department of Agriculture (USDA) share remained unchanged at 0.5%.
The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.
