Home loan application activity edges down after brief revival last month.
After a brief uptick in January, mortgage application activity dropped for the third consecutive time as rates continued to climb in recent weeks.
Home loan application volume fell 5.7% on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest market composite index report. On an unadjusted basis, the index was down 4% week over week.
“The 30-year fixed rate increased to 6.71% last week, the highest rate since November 2022, which drove a 6% drop in applications,” said MBA deputy chief economist Joel Kan. “After a brief revival in application activity in January when mortgage rates dropped down to 6.2%, there have now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month.”
Kan added that data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates.
Refinance applications posted a 6% decrease from the previous week, and purchase application volume slipped 3% week over week. Subsequently, the refi share of mortgage activity declined seven basis points to 31.8% of total applications.
“Both purchase and refinance applications declined last week, with purchase index at a 28-year low for a second consecutive week,” Kan said. “Purchase applications were 44% lower than a year ago, as homebuyers again retreat to the sidelines as higher rates crimp affordability. Refinance applications account for less than a third of all applications and remained more than 70% behind last year’s pace, as a majority of homeowners are already locked into lower rates.”