Despite mortgage rates hitting a near 23-year-high last week, the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) found overall mortgage application volume rising 2.3% week-over-week, for the week ending August 25, 2023.
The MBA’s Refinance Index, a reading that had dropped for several weeks as well, rose 3% from the previous week, yet was still 28% lower than the same week just one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index decreased a slight 0.3% compared to the previous week, and was 27% lower than the same week one year ago.
“Mortgage rates were mostly unchanged last week, with the 30-year fixed rate remaining at 7.31%–the highest since December 2000. Treasury yields peaked early in the week, and did move lower by the end, which may have spurred some activity,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “Mortgage applications for home purchases and refinances increased for the first time in five weeks, but remained at low levels. Purchase applications increased, but were still 27% lower than a year ago, as elevated mortgage rates and tight housing inventory continue to weigh on home buying activity.”
The MBA reports that the refi share of mortgage activity increased to 30.1% of total applications, up from 29.5% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5% of total applications.
“The refinance market continues to be slow despite last week’s gain, which was driven by a 7.9% spike in conventional refinances,” added Kan. “Government refinance applications dropped more than 10% last week.”
By loan type, the FHA share of total applications decreased to 13.2% from 14.3% the week prior. The VA share of total applications remained unchanged at 11.6% from the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the week prior.
The combination of high rates and low inventory have sidelined many would-be buyers, as Redfin’s Homebuyer Demand Index, which measures requests for home tours and other services, was down 7% year-over-year.
“The buyers out there right now are the ones who need to move,” said Phoenix Redfin Premier agent Kim Lotz. “I’m working with one couple from out of state who are coming to Phoenix because of a job transfer; they don’t have the luxury of waiting for mortgage rates to come down.”
The Redfin study also found that certain pockets of the nation are showing an increased demand in home searches over others. In Nashville, for instance, Redfin Premier agent Kristin Sanchez said there are more buyers than sellers.
“Some buyers are hoping they can get a home for under asking price to make up for high interest rates because they’re hearing the housing market is slow. But what’s happening nationally isn’t necessarily true here,” Sanchez said. “Tennessee is a hot spot for people relocating from other states. There are plenty of jobs, and the area is starving for inventory. So despite high rates, there are more house hunters than houses for sale. Homes that are priced competitively and in good condition are typically selling at or just over asking price with two or three offers.”
