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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March 9 – Mortgage Rates Continue to Inch Up, Applications Increase

On Thursday, March 9, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.73 percent, up from last week when it averaged 6.65 percent. A year ago at this time, the 30-year FRM averaged 3.85 percent.

The 15-year fixed-rate mortgage averaged 5.95 percent, up from last week when it averaged 5.89 percent. A year ago at this time, the 15-year FRM averaged 3.09 percent.

“Mortgage rates continue their upward trajectory as the Federal Reserve signals a more aggressive stance on monetary policy,” said Sam Khater, Freddie Mac’s Chief Economist. “Overall, consumers are spending in sectors that are not interest rate sensitive, such as travel and dining out. However, rate-sensitive sectors, such as housing, continue to be adversely affected. As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory.”

According to the Mortgage Bankers Association (MBA), mortgage applications increased 7.4 percent from one week earlier. The Refinance Index increased 9 percent from the previous week and was 76 percent lower than the same week one year ago. The unadjusted Purchase Index decreased 9 percent compared with the previous week and was 42 percent lower than the same week one year ago.

“Mortgage rates continued to increase last week. The 30-year fixed rate rose to 6.79 percent — the highest level since November 2022 and 270 basis points higher than a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week. Comparing the application indices from a year ago, purchase applications were still down 42 percent, and refinance activity was down 76 percent. Many borrowers are waiting on the sidelines for rates to come back down.”

More housing and market news

Commercial and multifamily mortgage delinquencies remained low in the fourth quarter of 2022, according to the MBA’s latest Commercial/Multifamily Delinquency Report.

“There were slight upticks among loans in CMBS, life companies, and banks and decreases for Fannie Mae and Freddie Mac, but the overall performance remained positive,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “It is likely that as higher interest rates and softer property values work through the system this year — prompted by maturing and adjustable-rate loans — loan performance will adjust.”

MBA’s Research Institute for Housing America (RIHA) published a second collection of essays on the impact of climate change on the real estate finance industry. “RIHA’s essays on climate change will help the real estate finance industry better understand climate risk and ways to mitigate it,” said Edward Seiler, Executive Director, RIHA, and MBA’s Associate Vice President, Housing Economics. “Developing strategies to address climate change remains a top priority within the industry and I am grateful to the authors for their contributions.”

Eric Gates, President of Apex Home Loans, has been appointed chairman of the Mortgage Action Alliance (MAA) for the 2023-2024 election cycle.

Owen Lee, CEO of Success Mortgage Partners, Inc., has been appointed chairman of the Mortgage Bankers Association Political Action Committee (MORPAC) for the 2023-2024 election cycle. 

Additional mortgage activity  

• The refinance share of mortgage activity increased to 28.9 percent of total applications from 28.7 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 increased to 12.8 percent from 12.0 percent the week prior.
• The VA share of total applications increased to 12.0 percent from 11.6 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 up again. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 6.73% (up from 6.65%)
• 15-year fixed-rate loans: 5.95% (up from 5.89%)

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

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