Mortgage applications stumble despite lowering rates
MBA vice president and deputy chief economist Joel Kan said overall application activity declined despite lowering interest rates as housing activity remains volatile at this time of the year, adding that purchase activity should soon pick up as the spring homebuying season gets closer and buyers regain purchasing power with the help of lower rates and moderating home price growth.
“Mortgage rates declined for the fourth straight week and have now fallen almost 40 basis points over the past month,” he said. “Treasury yields were higher on average last week, while mortgage rates decreased, which was a sign of a narrowing spread between the two.”
According to Kan, the spread between mortgage rates and the 10-year Treasury has “been abnormally wide since early 2022” and the further narrowing of this gap should put downward pressure on mortgage rates in the coming months.
The refinance share of mortgage activity decreased to 31.2% of total applications from 31.9% a week earlier, the MBA survey additionally revealed, while the adjustable-rate mortgage (ARM) share of activity rose to 6.7% of total applications.
Likewise, the FHA share of total applications increased to 12% from 11.9% and the VA share of total applications dropped to 11.9% from 13%.