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The Mortgage Bankers Association (MBA) recently reported that mortgage application activity in the United States rose by 5.3% on a seasonally adjusted basis compared to the previous week. This is good news for the housing market, which has experienced a slump in recent months. Furthermore, the 30-year fixed rate has decreased to 6.30%, the lowest level in two months.
According to Mike Fratantoni, MBA’s senior vice president and chief economist, prospective homebuyers have been sensitive to any drop in mortgage rates. This played out last week with purchase applications increasing by 8%. However, despite the increase in purchase applications, the unadjusted index saw a 31% decline from the same week one year ago. Additionally, while the seasonally adjusted Purchase Index increased, the Refinance Index only increased by a scant 0.1% from the previous week it was 57% lower than the same week one year ago. The refinance share of mortgage activity also decreased to 27% of total applications from 28.6% in the previous week.
The MBA data also showed changes in the share of federal programs. The FHA share of total applications increased to 12.3% from 12%, while the VA share increased to 12.8% from 11%. However, the USDA share of total applications decreased to 0.5% from 0.6% the week prior.
These statistics highlight the current state of the housing market in the United States. Although there has been a recent increase in mortgage application activity, it is still far below the levels seen in previous years. Additionally, the decline in the refinance share of mortgage activity indicates that homeowners are currently locked in at much lower rates, suggesting that many have already taken advantage of lower mortgage rates in previous years.
The decline in the share of USDA total applications may also reflect the changing dynamics of the housing market. According to a recent report by the National Association of Realtors, there has been a shift in the housing market, with more buyers moving from urban areas to rural areas. This shift is likely due to the COVID-19 pandemic and the increasing availability of remote work options.
Despite the recent increase in mortgage application activity, the job market is beginning to slow, which may impact the housing market in the coming months. However, with the continued availability of low mortgage rates, prospective homebuyers may still be able to take advantage of favorable conditions in the housing market.
In conclusion, the recent increase in mortgage application activity is a positive sign for the housing market. However, the decline in the refinance share of mortgage activity indicates that many homeowners have already taken advantage of lower mortgage rates in previous years. Additionally, the changing dynamics of the housing market, with more buyers moving to rural areas, may impact the industry in the coming months. Nonetheless, with continued low mortgage rates and increased buyer interest, the housing market may continue to see growth in the near future.
