Mortgage Bankers Association

The increase in federally backed loan activity helped drive overall volumes upward for the first time since early February, even as interest rates jumped again, according to the Mortgage Bankers Association.

A week after it dropped to a 28-year low, purchase activity decreased again by over 5%, according to the Mortgage Bankers Association.

Volumes fell 18% compared to the previous week, while refinance activity also pulled back.

Average purchase sizes have increased each week this year, likely signaling greater buyer activity occurring toward the higher end of the market.

A decline in jumbo products led to overall tightening, as conforming and government-sponsored loan categories measured in the Mortgage Bankers Association's index were unchanged from December.

Refinances surged 18% compared to the prior week and purchases 3%, but growing loan amounts signal still-limited affordability.

Despite lower interest rates, both purchases and refinances declined after recent surges, while average loan amounts have gradually crept up to start the year.

Despite the significant annual increase, home buyers saw signs of affordability returning in the latter months of the year.

Volumes came in higher for purchases and refinances, as well as for both conventional and government products.

Both government and conventional activity have picked up to start the year, as higher conforming amounts came into effect.

But refinances saw an upturn and pushed overall loan activity higher in the first week of 2023, the Mortgage Bankers Association said.

Higher interest rates helped drive down refinances by 87% and purchases by 42% compared to last year.

Refinances saw an uptick for a third straight seven-day stretch, but purchases flattened during a typically slow home buying period, according to the Mortgage Bankers Association.

Average loan amounts also increased, with mean purchase sizes crossing back above the $400,000 mark.

Shares picked up across all federal categories last week, but overall application volumes fell, dragged down by a cooling conventional purchase market, according to the Mortgage Bankers Association.

Activity swung upward for the fourth week in a row, but a steeper drop in refinances led overall volumes down by a fraction from seven days earlier and 66% on an annual basis.

Another fall in interest rates spurred a gain in activity, but volumes are still almost 70% off levels from 12 months ago, the Mortgage Bankers Association said.

The decline in loan activity and softening prices also helped drive down builder sentiment for the 11th month in a row.

Easing interest rates pushed purchases up, with their average loan size also declining to its lowest point since early 2021, but refinances fell again.

Jumbo offerings continued to tail off, offsetting a small gain in the availability of government-backed loans, according to the Mortgage Bankers Association.