Mortgage Apps Rise Slightly Week-Over-Week

Despite a third straight week of decline in the fixed-rate mortgage (FRM), overall mortgage applications increased just 0.5% from one week earlier, according to data from the MBA’s Weekly Mortgage Applications Survey for the week ending June 16, 2023.

While purchase apps rose slightly, the MBA’s Refinance Index decreased 2% from the previous week, and remained 40% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier, while the unadjusted Purchase Index decreased 0.1% compared with the previous week, and was 32% lower than the same week one year ago.

The refinance share of mortgage activity decreased to 26.9% of total applications, down from 27.3% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications.

By loan type, the FHA share of total applications increased to 13.3%, up slightly from 13% the week prior. The VA share of total applications fell to 11.9% from 12.6% the week prior. The USDA share of total applications decreased slightly to 0.4% from 0.5% the week prior.

“The 30-year fixed mortgage rate declined for the third consecutive week to 6.73%, while other mortgage rates saw mixed results. Purchase applications increased, driven by a 2% gain in conventional purchase applications, and a 3% increase in FHA purchase activity,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “First-time homebuyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory. Refinance applications continued their decline after the previous week’s increase, with the refinance share of applications just below 27%.”

According to Redfin, the number of homes for sale in the U.S. fell 7.1% year-over-year to 1.4 million on a seasonally adjusted basis in May 2023—marking the lowest level recorded by Redfin since 2012, and the first annual decline since April 2022.

By comparison, there were 2.2 million homes for sale in May of 2019—before the pandemic hit the U.S. housing market—meaning housing supply was 38.6% below pre-pandemic levels this May. America’s housing stock is dwindling because there are very few people selling homes. New listings of homes for sale declined 25.2% year-over-year in May to the third lowest level on record on a seasonally adjusted basis, as homeowners were handcuffed by high mortgage rates.

Redfin also found that high rates are keeping Americans in place as more than nine of every 10 (an estimated 91.8%) of U.S. homeowners with mortgages have an interest rate below 6%. This total is down just slightly from the record high of 92.9% hit in mid-2022. This means that more than 92% of homeowners with mortgages have mortgage rates below 6.70%, which is near the highest level in more than 20 years. Homeowners holding onto their comparatively low mortgage rates is a primary reason for today’s major shortage of new listings.