Mortgage Apps Gain for the Third Consecutive Week

According to the latest Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey, following three weeks of dwindling mortgage application volume, mortgage apps rose 3% week-over-week for the third consecutive week amid continued dwindling mortgage rates.

The MBA’s Refinance Index increased 5% over the previous week, yet was 68% lower than the same week just one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 3% compared with the previous week, and was 36% lower than the same week one year ago.

“Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy. Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48%, the lowest level in a month,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “However, mortgage rates have not dropped as much as Treasury rates due to increased MBS market volatility. The spread between the 30-year fixed and 10-year Treasury remained wide at around 300 basis points, compared to a more typical spread of 180 basis points.”

By loan type, the FHA share of total applications decreased to 12.3% from 12.9% the week prior. The VA share of total applications decreased to 11.7% from 11.9% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.

As Kan mentioned, uncertainty in the banking sector has forced the Fed to raise the nominal interest rate by 25 basis points to a range of 4.75% to 5.00% at the conclusion of the March meeting of the Federal Reserve’s Federal Open Market Committee (FOMC).

Approximately 10 days ago, Signature Bank was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Signature Bank had reported total assets of $110.4 billion, and total deposits of $88.6 billion as of December 31, 2022. Earlier this week, New York Community Bancorp Inc. (NYCB) announced that its bank subsidiary, Flagstar Bank, acquired certain assets and assumed certain liabilities of Signature Bridge Bank from the FDIC.

On March 10, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed receiver. The FDIC then transferred all deposits—both insured and uninsured—and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to protect all depositors of Silicon Valley Bank. The FDIC has named Tim Mayopoulos, former President and CEO of Fannie Mae, as CEO of Silicon Valley Bridge Bank.

Despite this economic uncertainty, homeowners are showing renewed interest in the refinance market, as the MBA reported the refi share of mortgage activity rose slightly to 28.6% of total applications, up from 28.2% the previous week. The adjustable-rate mortgage (ARM) share of activity meanwhile increased to 8.6% of total applications.

“Both purchase and refinance applications increased for the third week in a row, as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels,” noted Kan.

In February, Redfin reported the median U.S. home sale price fell 1.2% in February to $386,721, marking the first year-over-year decline since 2012.

Redfin also reported that competition eased during the month of February, as just under half of home offers (45.2%) written by Redfin agents faced bidding wars. The bidding-war rate has now hovered around the same level for four months, following nine months of declines.

“The housing market was fairly steady in February, but it’s been more of a mixed bag in March,” said Laxmi Penupothula, a Redfin Real Estate Agent based in San Jose, California. “House hunters in the Bay Area are out there, but some are skittish because they’re hearing rumors of layoffs in their company all-hands meetings, reading about troubles in the banking sector, and seeing the value of their stock portfolios swing up and down.”

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