Mortgage rates for the week ending April 9 started higher than they finished, and that early elevation, economists say, contributed to a decline in purchase and refinance applications.
Mortgage applications for the week dipped 3.7% from the previous week, based on data from the Market Composite Index, a measure of mortgage loan application volume used in the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. The Refinance Index decreased 5% from the previous week and was 31% lower than the same week one year ago. This MBA survey* covers more than 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.
"Purchase and refinance applications declined, with most of the pullback coming earlier in the week when rates were higher. Treasury yields started last week high—close to the prior week's level at over 1.%—before decreasing 6 basis points," said Joel Kan, MBA's AVP of Economic and Industry Forecasting. "Refinance activity has now decreased for nine of the past 10 weeks, as rates have gone from 2.92% to 3.27% over the same period. Last week's index level was the lowest in over a year, as mortgage rates continue to trend higher. Many borrowers have either already refinanced at lower rates or are unwilling—or unable—to refinance at current rates."
Kan added that the third straight week of declining purchase activity is a sign that rising home prices and tight supply are constraining home sales, especially in the lower-price tiers.
"Purchase applications were still above last year's pandemic-impacted low point," Kan said, "but fell behind the level of activity seen the same week in 2019."
The refinance portion of mortgage activity dropped during the week from 60.3% to 59.2% of total applications.
The adjustable-rate mortgage (ARM) share of activity decreased to 3.6% of total applications.
By type of loan, the report showed:
FHA applications increased to 10.8% from 10.2%
VA applications decreased to 12.% from 13.8%
USDA share of total applications decreased to 0.4% from 0.5%
*Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.