Mortgage applications decline ahead of Fed meeting

Mortgage demand slumped last week as consumers hit the brakes on purchase applications. 

Mortgage applications decreased by 7.2% in the week ending Jan. 26 compared to one week earlier on a seasonally adjusted basis, according to the Mortgage Bankers Association‘s (MBA) weekly mortgage applications survey.

“Applications decreased compared to a holiday-adjusted week, driven by a decline in purchase applications that offset a slight increase in refinance activity,”Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity.”

The average loan size for purchase applications has risen in recent weeks to $444,100, the largest average loan size since May 2022, Kan added. On the strength of lower mortgage rates, homebuyers are reclaiming some purchasing power. 

The MBA survey shows the average mortgage rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 6.78% last week. Meanwhile, rates on jumbo loans (greater than $766,550) also remained unchanged at  6.94%.

Loan types 

The MBA data shows that purchase apps decreased by 11% from one week earlier on a seasonally adjusted basis, while refis picked up by 2% in the same period. Last week, refis comprised 34.2% of the total applications, up from 32.7% the previous week.

The Federal Housing Administration’s (FHA) share of total applications decreased to 13.8% last week, down from 14.1% the week prior. The U.S. Department of Veterans Affairs (VA) share fell to 13.3%, down from 13.7% the week before. The U.S. Department of Agriculture (USDA) share remained unchanged at 0.4%.

The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.