Mortgage application activity hits 28-year low

A powerful typhoon and the upcoming three-day weekend have dampened the impact of interest rate improvements during the week ending September 1. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, failed to post its first increase since mid-July for a second week. The index declined 2.9 percent on a seasonally adjusted basis and 5.0 percent before adjustment.

Refinance index decreased by 5 percent That was down 30 percent from last week and compared to the same week a year ago. The refinance share of mortgage activity fell from 30.1 percent of total applications to 30.0 percent.

Purchasing index was down 2.0 percent and 5.0 percent on a seasonally adjusted and unadjusted basis compared to the previous week. This was 28 percent less than the same week a year ago.

“Mortgage applications rejected This is the lowest level since December 1996, despite the decline in mortgage rates. Both purchase and refinance applications fell, pushing the purchase index to a 28-year low, as low housing inventory and high mortgage rates kept potential buyers on the sidelines, said Joel Kahn, MBA vice president and deputy chief economist. “The 30-year fixed mortgage rate declined to 7.21 percent last week, but despite mixed data on the health of the economy and signs of a cooling job market, rates remain a full percentage point higher than a year ago. The refinance index fell to its lowest level since January 2023 due to a 6 percent decline in conventional refinances.

Additional data from MBA’s weekly mortgage application survey

• Both overall and purchase loan sizes declined by slightly more than $5,000 week-over-week. The average loan was $361,700 and the purchase loan averaged $408,800.
• The FHA’s share of total applications increased from 13.2 percent to 13.7 percent and the VA’s share fell from 11.6 percent to 11.3 percent. USDA’s share of total applications increased to 0.6 percent from 0.4 percent the previous week.
• The 7.21 percent average contract interest rate on a conforming 30-year fixed rate mortgage (FRM) was 10 basis points lower than last week. The score decreased from 0.73 to 0.69.
• The average rate for jumbo 30-year FRM also stood at 7.21 per cent compared to 7.28 per cent last week. The score increased from 0.66 to 0.76.
• The 30-year FRM rate decreased from 7.10 percent to 7.03 percent with FHA backing. The score decreased from 1.09 to 0.95.
• Fifteen-year FRM rates averaged 6.66 percent, up 0.86 points. Last week’s average was 6.72 percent and 1.11 points.
• The rate on the 5/1 adjustable-rate mortgage (ARM) dropped from 6.48 percent to 6.33 percent. The score decreased from 1.20 to 1.11.
• ARM’s share of activity fell from 7.5 percent to 6.7 percent of total applications.