Warning: Undefined variable $custom_content in /home4/comcompare/public_html/mortgagenews/wp-content/plugins/code-snippets/php/snippet-ops.php(582) : eval()'d code on line 10
The Mortgage Bankers Association’s Weekly Mortgage Applications Survey reported a 6.3 percent increase in U.S. mortgage applications for the week ending May 5, 2023.
The Market Composite Index, which measures mortgage loan application volume, also increased 6.3 percent on a seasonally adjusted basis compared to the previous week. The Index increased by 7 percent on an unadjusted basis.
In a positive trend, the Refinance Index showed a 10 percent increase compared to the previous week, demonstrating growing interest in refinancing options.
Although lower compared to the same week last year, this decline of 44 percent indicates a more stable market environment.
Similarly, the Purchase Index experienced a modest 5 percent increase on a seasonally adjusted basis within one week, reflecting encouraging growth in purchasing activities.
Additionally, the unadjusted Purchase Index witnessed a 5.3 percent increase compared to the previous week, suggesting a potential resurgence in buying interest.
Despite a 32 percent drop compared to the same week one year ago, the market remains resilient and poised for further developments.
Mortgage applications experienced a notable boost due to a decline in interest rates in the previous week.
The Federal Reserve’s indication of a potential pause in the federal funds rate, in light of expectations of slower inflation and tighter financial conditions, played a significant role in this positive response.
Mortgage rates decreased across all surveyed loan types, with the 30-year fixed rate settling at 6.48 percent,” explained Joel Kan, MBA’s Vice President, and Deputy Chief Economist.
He further highlighted that purchase applications saw a 5 percent increase, although they remained over 30 percent lower than the previous year’s levels.
While the decrease in rates has supported homebuyers in the market, the limited availability of properties for sale remains a challenge for many prospective buyers.
On the other hand, refinance activity surged by 10 percent, reaching its highest point since September 2022. It’s important to note that the number of borrowers who can benefit from refinancing at these rate levels is relatively small.
Recent mortgage activity data shows that the refinance share of total applications experienced a slight increase, reaching 28.0 percent compared to 27.2 percent in the previous week.
On the other hand, the adjustable-rate mortgage (ARM) share of activity decreased to 6.8 percent of total applications.
In terms of government-backed loans, the Federal Housing Administration’s (FHA) share of total applications declined from 12.5 percent to 12.1 percent in the past week.
Conversely, the Veterans Affairs (VA) share of total applications witnessed an increase, rising to 12.9 percent from 11.3 percent the week prior.
However, the United States Department of Agriculture’s (USDA) share of total applications saw a slight decrease, falling from 0.5 percent to 0.4 percent.
It’s worth noting that these figures represent the recent changes in mortgage activity and provide insights into the market trends.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) experienced a slight decline, reaching 6.48 percent, down from 6.50 percent previously.
Additionally, points associated with these mortgages decreased from 0.63 to 0.61, inclusive of the origination fee, for loans with an 80 percent loan-to-value ratio (LTV).
This adjustment resulted in a lower effective rate compared to the previous week, providing potential benefits to borrowers.
The average contract interest rate for jumbo loans has experienced a slight decrease from 6.37 percent to 6.33 percent, indicating a small shift in mortgage rates for higher loan amounts.
FHA-backed mortgages have seen a minor decrease in average contract interest rates, going from 6.43 percent to 6.41 percent. This adjustment may offer some relief to borrowers who qualify for FHA loans.
The average contract interest rate for 15-year fixed-rate mortgages has decreased from 6.01 percent to 5.91 percent, presenting a potential opportunity for borrowers interested in shorter loan terms.
5/1 ARMs have seen a decrease in the average contract interest rate from 5.48 percent to 5.35 percent, which might attract borrowers who are considering adjustable-rate mortgages.
Reference Source: World Property Journal
