Mortgage Bankers Association

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.

But refinances dwindled further and helped drive overall volumes to a slight decline last week.

High interest rates and affordability concerns continue to suppress purchase demand, though, leading overall numbers down again last week, the Mortgage Bankers Association reported.

Ongoing weakness in housing markets and the economy has now driven purchase activity to its lowest level since 2015, while overall application numbers decreased for the 10th time in 11 weeks.

Higher interest rates are driving borrowers to adjustable-rate loans, which saw close to a 13% share in weekly activity, the highest since 2008.

Softening prices have yet to lead to a turnaround in purchase activity, even as the average loan size fell under $400,000.

Lenders pulled back on government-refinance programs and products for lower-credit score borrowers, pushing loan availability down for the seventh month in a row, the Mortgage Bankers Association said.