U.S. Mortgage Market in Slump as Applications Hit 28-Year Low

U.S. mortgage applications for the week ending September 1, 2023 fell 2.9% from the previous week, according to the latest weekly mortgage application survey from the Mortgage Bankers Association.

U.S. Mortgage Applications Down 2.9% from Last Week

U.S. Mortgage Demand Plummets: at 1996 Low, Rates Fall to 7.21%

 

The Market Composite Index, a measure of mortgage applications, fell 2.9% from last week on a seasonally adjusted basis. The unadjusted index fell 5% from last week.

 

The Refinance Index was down 5% from last week and down 30% from a year ago. The seasonally adjusted Purchase Index was down 2% from last week. The unadjusted purchase index fell 5 percent from last week and is down 28 percent from a year ago.

 

Joel Kan, vice president and deputy chief economist of the Mortgage Bankers Association, said, "Mortgage applications fell to their lowest level since December 1996, despite the decline in mortgage rates. Purchase and refinance applications both fell, with the purchase index hitting a 28-year low, reflecting potential buyers' wait-and-see attitude due to a lack of housing inventory and high mortgage rates. 30-year fixed-rate mortgages fell to 7.21 percent last week, but are still more than a percentage point higher than a year ago, despite mixed economic data and signs of cooling in the job market. The refinance index also fell to its lowest level since January 2023, driven largely by a 6 percent decline in conventional refinance applications."

 

The share of mortgage activity that was refinanced fell to 30.0 percent from 30.1 percent last week. The share of adjustable-rate mortgages fell to 6.7 percent from 6.7 percent last week.

 

The share of Federal Housing Administration mortgage applications rose to 13.7 percent from 13.2 percent last week. The share of VA mortgage applications fell to 11.3 percent from 11.6 percent last week. The share of Department of Agriculture mortgage applications rose to 0.6 percent from 0.4 percent last week.

 

The average contract interest rate for 30-year fixed-rate mortgages with qualifying loan amounts ($726,200 or less) fell to 7.21 percent from 7.31 percent, and points (including origination fees) fell to 0.69 from 0.73 for loans with 80 percent loan-to-value ratios (LTVs). Effective rates were down from last week.

 

The average contract rate for 30-year fixed-rate mortgages above the standard loan-to-value ($726,200 or more) declined to 7.21 percent from 7.28 percent, and points (including origination fees) increased to 0.76 from 0.66 for loans with 80 percent LTV. Effective rates were down from last week.

 

The average contract rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration fell to 7.03 percent from 7.10 percent, and points (including origination fees) fell to 0.95 from 1.09 for loans in 80 percent LTV. Effective rates were down from last week.

 

The average contract rate for 15-year fixed-rate mortgages decreased to 6.66 percent from 6.72 percent, and points (including origination fees) decreased to 0.86 from 1.11 for loans in 80 percent LTV. Effective rates were down from last week.

 

The average contract rate for 5/1 adjustable-rate mortgages decreased to 6.33 percent from 6.48 percent, and points (including origination fees) decreased to 1.11 from 1.20 for loans in 80 percent LTV. Effective rates were down from last week.