Mortgage Applications Fall to Lowest Level in 28 Years

WASHINGTON—The Mortgage Bankers Association reported on Sept. 6 that mortgage applications decreased 2.9% from one week earlier, according to data from the association’s Weekly Mortgage Applications Survey for the week ended Sept. 1, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5% compared with the previous week. The Refinance Index decreased 5% from the previous week and was 30% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index decreased 5% compared with the previous week and was 28% lower than the same week one year ago.

“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates. Both purchase and refinance applications fell, with the purchase index hitting a 28-year low, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed mortgage rate decreased to 7.21% last week, but rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market. The refinance index dropped to its lowest level since January 2023, driven by a 6% decline in conventional refinances.”

The refinance share of mortgage activity decreased to 30.0% of total applications from 30.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.7% of total applications.

The FHA share of total applications increased to 13.7% from 13.2% the week prior. The VA share of total applications decreased to 11.3% from 11.6% the week prior. The USDA share of total applications increased to 0.6% from 0.4% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.21% from 7.31%, with points decreasing to 0.69 from 0.73 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 7.21% from 7.28%, with points increasing to 0.76 from 0.66 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 7.03% from 7.10%, with points decreasing to 0.95 from 1.09 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.66% from 6.72%, with points decreasing to 0.86 from 1.11 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 6.33% from 6.48%, with points decreasing to 1.11 from 1.20 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.