A small increase is better than no increase
Mortgage application activity remained steady last week, rising by only 0.1%, according to the Mortgage Bankers Association (MBA).
Despite limited movement overall, the market showed nuanced trends, including increased purchase applications and declining refinance activity. This occurred as mortgage rates remained near 7%, a key psychological threshold for borrowers.
The MBA’s Market Composite Index, a measure of overall application volume, edged up 0.1% on a seasonally adjusted basis and 3% on an unadjusted basis from the previous week.
The Refinance Index, however, dropped 3% week-over-week but was 42% higher than the same week in 2024.
Purchase applications saw modest growth, with the seasonally adjusted Purchase Index rising 1% and the unadjusted index increasing 7%. Year-over-year, purchase activity was up 2%.
“Mortgage application volume was little changed last week, but there was a small increase in conventional purchase volume, which brought the level of total purchase volume up almost two per cent above last year at this time,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
Fratantoni attributed the sluggish pace of refinances and purchases to mortgage rates staying near 7%. He also noted that current economic data suggests the Federal Reserve is unlikely to adjust its policy in the near term, which, along with broader policy uncertainties, may stabilize longer-term rates.
The breakdown of applications by loan type reflected minor shifts. The refinance share of total applications dropped to 40.4% from 42.7%, while adjustable-rate mortgages (ARMs) increased to 5.5%.
Federal Housing Administration (FHA)-backed loans accounted for 16.5% of applications, down from 16.9%. Similarly, Veterans Affairs-backed applications fell to 14.6%, and USDA loans dropped to 0.4% from 0.5%.
Interest rates showed varied movements. The average rate for 30-year fixed-rate conforming loans ($766,550 or less) decreased to 7.02% from 7.09%, with points falling to 0.62.
Rates for jumbo loans over $766,550 averaged 6.98%, down from 7.05%, with points declining to 0.50.
FHA-backed loans saw a slight rate decrease to 6.74%, while 15-year fixed-rate mortgages rose to 6.45%. Rates for 5/1 ARMs climbed to 6.41%, reflecting a notable weekly increase.
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