Mortgage demand receded after the release of a stronger-than-expected inflation reading last week.
Mortgage applications decreased by 1.6% on a seasonally adjusted basis during the week ending March 15, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. It was the first decrease in demand in three weeks.
“Mortgage rates increased last week as incoming data showed inflation was still hotter than expected, which stoked concerns about the timing and extent to which the Fed might be able to reduce the fed funds rates this year. After three weeks of declines, the 30-year fixed mortgage rate increased to 6.97%,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
Mortgage applications continued to show sensitivity to rate movements, and both purchase and refinance activity decreased during the week. Purchase loan application volume dropped by 1% from one week earlier and was about 14% below the level of the same time last year. Meanwhile, refinance volume fell by 3% from the prior week.
The average loan size for purchase applications increased to the highest level since May 2022 due to limited housing supply and high prices.
As of Wednesday, the 30-year fixed rate on HousingWire’s Mortgage Rates Center stood at 7.08%.
The MBA survey shows that the average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) increased to 6.97%, up from 6.84% last week. Meanwhile, rates on jumbo loans (balances greater than $766,550) increased to 7.14%, up from 7.04 one week ago.
The Federal Housing Administration (FHA) share of total applications increased to 12.1% last week, up from 12% the week before. The U.S. Department of Veterans Affairs (VA) share fell to 12.1%, down from 12.2% the week before. And the U.S. Department of Agriculture (USDA) share remained unchanged at 0.5%.
The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.