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Mortgage Apps Surge With Near-30% Weekly Rise

The year 2023 began with the 30-year fixed-rate mortgage (FRM) dropping 15-basis points, reaching lows last seen in September 2022, and buyers responded, driving overall mortgage application volume up 27.9% week-over-week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2023.

The Refinance Index continued to show strength amid the decline in rates, rising 34% over the previous week, yet remains 81% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 25% from one week earlier. The unadjusted Purchase Index increased 32% compared with the previous week, and was 35 percent lower than the same week one year ago.

“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Despite these gains, refinance activity remains more than 80% below last year’s pace and purchase volume remains 35% below year-ago levels."

Freddie Mac reported that the 30-year FRM averaged 6.33% for the week ending January 12, 2023, down 15 basis points from the previous week’s reading of 6.48%. A year ago at this time, the 30-year FRM averaged 3.45%.

“While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates,” said Sam Khater, Freddie Mac’s Chief Economist. “Over the last few weeks, latent demand has been on display with buyers jumping in and out of the market as rates move.”

The MBA also reported that the refinance share of mortgage activity increased slightly to 31.2% of total applications, up from 30.7% the previous week. The adjustable-rate mortgage (ARM) share of activity fell to just 6.6% of total applications.

“Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall,” added Fratantoni. “As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”

And news of a market upswing was supported by Redfin’s latest findings that Google searches for “Homes for Sale” were up nearly 50% from their November low during the week ending January 7, but down nearly 17% year-over-year. The median home sale price stood at $351,250, up 0.8% year-over-year, while the median asking price of newly listed homes was $352,150, up 3.9% year-over-year.

“We’re entering 2023 with positive economic news: The latest consumer price index report confirms that the worst of inflation is behind us. That means the Fed is likely to continue easing its interest-rate increases, which should cause mortgage rates to continue gradually declining. This could bring back some homebuyers in the coming months,” noted Redfin Deputy Chief Economist Taylor Marr. “We’ve already seen an uptick in people initiating home searches. Although those house hunters haven’t yet turned into buyers, they may soon given that monthly mortgage payments are notably down from their peak and the latest inflation and employment data lower the chances of a recession.”

By loan type, the FHA share of total applications fell slightly to 13% from 13.4% the week prior, while the VA share of total apps decreased to 11.8% from 13.2% the week prior. The USDA share of total applications remained unchanged at 0.6% from the week prior.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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