Mortgage Rates Decrease Again and Applications Rise

On Thursday, March 30, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.32 percent, down from last week when it averaged 6.42 percent. A year ago at this time, the 30-year FRM averaged 4.67 percent.

The 15-year fixed-rate mortgage averaged 5.56 percent, down from last week when it averaged 5.68 percent. A year ago at this time, the 15-year FRM averaged 3.83 percent.

“Economic uncertainty continues to bring mortgage rates down,” said Sam Khater, Freddie Mac’s Chief Economist. “Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring home buying season gets underway, low inventory remains a key challenge for prospective buyers.”

According to the Mortgage Bankers Association (MBA), mortgage applications increased 2.9 percent from one week earlier. The Refinance Index increased 5 percent from the previous week and was 61 percent lower than the same week one year ago. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 35 percent lower than the same week one year ago.

“Application activity increased as mortgage rates declined for the third straight week. The 30-year fixed rate declined to 6.45 percent, the lowest level in over a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications. Home-price growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power. Purchase applications remain over 30 percent behind last year’s pace, but recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”

Added Kan, “Refinance activity also picked up last week, but remains 61 percent below last year’s pace. Most homeowners still have rates significantly lower than current levels, leaving only a small pool of borrowers with an incentive to refinance.”

More housing and market news

According to MBA’s Purchase Applications Payment Index (PAPI), homebuyer affordability declined in February, with the national median payment applied for by purchase applicants increasing 4.9 percent to $2,061 from $1,964 in January. 

“Higher mortgage rates and home prices led to continued erosion in homebuyer affordability in February,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “Many prospective homebuyers continue to feel this affordability squeeze, with the typical purchase application loan amount increasing $8,003 over the month to $320,003. Given ongoing economic uncertainty and the likelihood of a recession, MBA expects mortgage rates to decline as this year progresses, which will help affordability.”  

Additional mortgage activity  

• The refinance share of mortgage activity increased to 29.1 percent of total applications from 28.6 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity decreased to 7.7 percent of total applications.
• The FHA share of total applications remained unchanged at 12.3 percent from the week prior.
• The VA share of total applications decreased to 11.6 percent from 11.7 percent the week prior.
• The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

This week in mortgage rates

Rates continue to drop. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 6.32% (down from 6.42%)
• 15-year fixed-rate loans: 5.56% (down from 5.68%)

Check back next week for the most up-to-date mortgage and housing news.

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March 23 – Mortgage Rates Slide Down, Applications Increase for Third Week in a Row

On Thursday, March 23, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.42 percent, down from last week when it averaged 6.60 percent. A year ago at this time, the 30-year FRM averaged 4.42 percent.

The 15-year fixed-rate mortgage averaged 5.68 percent, down from last week when it averaged 5.90 percent. A year ago at this time, the 15-year FRM averaged 3.63 percent.

“Mortgage rates continued to slide down as financial market concerns came to the fore over the last two weeks,” said Sam Khater, Freddie Mac’s Chief Economist. “However, on the homebuyer front, the news is more positive with improved purchase demand and stabilizing home prices. If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season.”

According to the Mortgage Bankers Association (MBA), mortgage applications increased 3 percent from one week earlier. The Refinance Index increased 5 percent from the previous week and was 68 percent lower than the same week one year ago. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 36 percent 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 percent, the lowest level in a month,” said Joel Kan, MBA’s Vice President 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.”

More housing and market news

On Wednesday, Federal Reserve officials raised interest rates by a quarter-point while noting that bank turmoil could help slow the economy. The bank collapses in recent weeks have underscored the risk that rapid Fed rate moves could stoke financial instability. The officials forecast that one more rate increase in 2023 may be warranted, but they do not know yet.

In response to the Federal Reserve’s FOMC statement,MBA SVP and Chief Economist Mike Fratantoni said, “Homebuyers in 2023 have shown themselves to be quite sensitive to any changes in mortgage rates. With this move from the Federal Reserve, MBA is holding to its forecast that mortgage rates are likely to trend down over the course of this year, which should provide support for the purchase market. The housing market was the first sector to slow as the result of tighter monetary policy and should be the first to benefit as policymakers slow — and ultimately stop — hiking rates.”

According to the MBA, the level of commercial/multifamily mortgage debt outstanding at the end of 2022 was $324 billion (7.7 percent) higher than at the end of 2021. Total mortgage debt outstanding rose by 1.7 percent in the fourth quarter of 2022. Multifamily mortgage debt grew by 1.8 percent during the fourth quarter and by 8.2 percent for the entire year.

The total number of loans in forbearance decreased to 0.60 percent in February 2023.

Additional mortgage activity  

• The refinance share of mortgage activity increased to 28.6 percent of total applications from 28.2 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity increased to 8.6 percent of total applications.
• The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior.
• The VA share of total applications decreased to 11.7 percent from 11.9 percent the week prior.
• The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

This week in mortgage rates

Rates continue to decrease. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 6.42% (down from 6.60%)
• 15-year fixed-rate loans: 5.68% (down from 5.90%)

Check back next week for the most up-to-date mortgage and housing news.

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March 16 – Mortgage Rates Pull Back, Applications Up Again

On Thursday, March 16, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.60 percent, down from last week when it averaged 6.73 percent. A year ago at this time, the 30-year FRM averaged 4.16 percent.

The 15-year fixed-rate mortgage averaged 5.90 percent, down from last week when it averaged 5.95 percent. A year ago at this time, the 15-year FRM averaged 3.39 percent.

“Mortgage rates are down following an increase of more than half a percent over five consecutive weeks,” said Sam Khater, Freddie Mac’s Chief Economist. “Turbulence in the financial markets is putting significant downward pressure on rates, which should benefit borrowers in the short term. During times of high mortgage rate volatility, homebuyers would greatly benefit from shopping for additional rate quotes. Our research concludes that homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among multiple lenders.”

According to the Mortgage Bankers Association (MBA), mortgage applications increased 6.5 percent from one week earlier. The Refinance Index increased 5 percent from the previous week and was 74 percent lower than the same week one year ago. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 38 percent lower than the same week one year ago.

“Treasury yields declined late last week, as market concerns over bank closures and the potential for broader ripple effects triggered a flight to safety in Treasury bonds. This decline pushed mortgage rates for all loan types lower, with the 30-year fixed rate decreasing to 6.71 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Home-purchase applications increased for the second straight week but remained almost 40 percent below last year’s pace. While lower rates should buoy housing demand, the financial market volatility may cause buyers to pause their decisions.”

Added Kan, “Refinance activity remained more than 70 percent behind last year’s level, as rates are still more than two percentage points higher than a year ago. The dip in rates did bring some borrowers back, as evidenced by the 5 percent increase in refinance applications last week.”

More housing and market news

MBA’s Builder Application Survey (BAS) data shows that mortgage applications for new home purchases increased by 4 percent in February 2023 compared with the month prior. “Applications for purchase new home sales were up in February and from the same time a year ago,” said MBA’s Kan. “The uptick in new home purchase applications showed a seasonal pick up, and that segment of the market continues to show healthier activity than the broader purchase market, which is still showing annual declines of over 30 percent. Buyers, however, remain extremely sensitive to movements in mortgage rates and the broader economy. Mortgage rates picked up in February, which put a damper on housing activity.”

According to the Mortgage Credit Availability Index (MCAI), mortgage credit availability decreased by 3.0 percent to 100.1 in February, indicating that lending standards are tightening. This is its lowest level since January 2013, with all loan types seeing declines in availability over the month.

The MBA announced the members of its 2023 Affordable Rental Housing Advisory Council. “MBA and its members are committed to expanding affordable rental housing opportunities for minorities and communities of color,” said MBA President and CEO Bob Broeksmit, CMB. “The Council is instrumental in developing strategies and recommendations that will assist MBA in creating effective and equitable solutions to address our nation’s affordable rental housing crisis.”

Freddie Mac Multifamily Apartment Investment Market Index^® (AIMI) fell by 7.6% in the fourth quarter of 2022, with the index down 25.8% year over year. “The extraordinary increase in mortgage rates drove the decline in AIMI as 2022 concluded,” said Steve Guggenmos, Vice President of Research & Modeling at Freddie Mac. “Rising rates and slowing property cash flows impacted investment conditions, despite the fact that Multifamily fundamentals that drive property cash flows are not expected to weaken significantly.”

Additional mortgage activity  

• The refinance share of mortgage activity decreased to 28.2 percent of total applications from 28.9 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity decreased to 8.5 percent of total applications.
• The FHA share of total applications increased to 12.9 percent from 12.8 percent the week prior.
• The VA share of total applications decreased to 11.9 percent from 12.0 percent the week prior.
• The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

This week in mortgage rates

Rates decline. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 6.60% (down from 6.73%)
• 15-year fixed-rate loans: 5.90% (down from 5.95%)

Check back next week for the most up-to-date mortgage and housing news.

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