The Mortgage Bankers Association (MBA) said its Market Composite Index for the week ended April 14 was down 8.8 percent on a seasonally adjusted basis from one week earlier. The Index, a measure of loan application volume, declined by 8 percent on an unadjusted basis. Applications for both refinancing and home purchasing retreated. The Refinance Index decreased 6.0 percent from the previous week while the Purchase Index was down 10.0 percent on a seasonally adjusted basis and 9.0 percent before adjustment. Refinancing activity is now 56 percent lower than the same week one year ago and purchasing has declined by 36 percent. [refiappschart] [purchaseappschart] “Last week’s increase in mortgage rates prompted a pullback in application activity. With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes. The 30-year fixed rate increased 13 basis points to 6.43 percent, which led to purchase applications declining 10 percent,” said Joel Kan, MBA’s Vice President and Chief Economist. “Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act. The 10-percent drop in FHA purchase applications, and the increase in the average purchase loan size to its highest level in a month, are other indications that first-time buyers have pulled back. The spread between the jumbo and conforming 30-year fixed rates widened slightly last week to 15 basis points, but this was a much tighter spread compared to the past year. As banks reduce their willingness to hold jumbo loans, we expect this narrowing trend to continue .”
