Purchase Mortgage Apps Fall to 28-Year Low

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending September 29, 2023, which found a 6% week-over-week decline in overall mortgage application volume, as the purchase market fell to levels last reported in 1995.

The MBA’s Refinance Index decreased 7% from the previous week, and was 11% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 6% from one week earlier, while the unadjusted Purchase Index decreased 6% compared to the previous week, and was 22% lower than the same week just one year ago.

“Mortgage rates continued to move higher last week, as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week to 7.53%–the highest rate since 2000,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “As a result, mortgage applications grounded to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week, and the ARM share increased to 8%, as some borrowers searched for ways to lower their payments.”

The MBA also reported that the refi share of mortgage activity decreased to 31.7% of total applications, down slightly from 31.9% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8% of total applications.

By loan type, the FHA share of total applications rose slightly to 14.5%, up from 14.1% the week prior. The VA share of total applications decreased to 10.1% from 10.9% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.

As if rates were not posing enough of a challenge for many, home prices on the limited number of homes available are also playing a key role in affordability challenges as Black Knight, now a part of Intercontinental Exchange Inc., reports that August home prices rose at an exceptionally strong seasonally adjusted rate of 0.68% from July 2023. Black Knight found that along with a lower starting point due to late 2022 price drops, August’s increase as enough to push the annual rate of home price growth up by 3.8%, up from 2.4% in July and 0.25% in May.

"After essentially flattening earlier this year, year-over-year home price growth has been reaccelerating for the last few months," said Andy Walden, ICE VP of Enterprise Research. "Growth remained strong in August, with home prices up a seasonally adjusted +0.68% from July hitting yet another record high for the fourth consecutive month. It was widespread, as well; prices in nearly half of the nation's 50 largest markets climbed by +0.75% or more. Even on a non-adjusted basis, August's gain of +0.24% was more than 60% larger than the 25-year average for the month. Either way you look at it, the increase was sufficient to push annual appreciation up to a stronger-than-expected +3.8%. This marks three months of clear acceleration in the rate of growth at the national level, with annual HPA up from +2.4% in July and just +0.25% back in May. Likewise, August marked the second consecutive month in which annual HPA trended higher in every one of the 50 largest U.S. markets, mirroring the sharp reacceleration we're seeing at the national level.”