Mortgage Purchase App Volume Rises for Second Consecutive Week

As mortgage rates dipped over concerns of bank closures, the Mortgage Bankers Association (MBA) reported that overall mortgage application volume rose once again, increasing 6.5% week-over-week, according to the MBA’s Weekly Mortgage Applications Survey for the week ending March 10, 2023.

The MBA’s Refinance Index increased 5% over the previous week, but remained 74% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 7% from one week earlier. The unadjusted Purchase Index increased 8% compared with the previous week, and was 38% lower than the same week one year ago.

“Treasury yields declined late last week, as market concerns over bank closures and the potential for broader ripple effects triggered a flight to safety in Treasury bonds. This decline pushed mortgage rates for all loan types lower, with the 30-year fixed rate decreasing to 6.71%,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “Home-purchase applications increased for the second straight week, but remained almost 40% below last year’s pace. While lower rates should buoy housing demand, the financial market volatility may cause buyers to pause their decisions.”

Also this week, the refinance share of mortgage activity decreased to 28.2% of total applications, down slightly from 28.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to just 8.5% of total applications.

“Refinance activity remained more than 70% behind last year’s level, as rates are still more than two percentage points higher than a year ago,” added Kan. “The dip in rates did bring some borrowers back as evidenced by the 5% increase in refinance applications last week.”

By loan type, the FHA share of total applications increased to 12.9%, up slightly from 12.8% the week prior. The VA share of total applications decreased slightly to 11.9% from 12% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.

Despite the rise in app volume and dip in mortgage rates, many potential buyers are hesitant to jump back into the market. Last week, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver. As of December 31, 2022, Silicon Valley Bank had a reported approximate $209 billion in total assets, and nearly $175.4 billion in total deposits.

SVB’s closure came on the heels of the announcement that Signature Bank was closed by the New York State Department of Financial Services, which also appointed the FDIC as receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders. At the time of the announcement, Signature Bank had 40 branches across the country in New York, California, Connecticut, North Carolina, and Nevada.