Mortgage Application Activity Stumbles by 12.7%

Mortgage application activity dropped during the week ending April 18, according to data from the Mortgage Bankers Association (MBA).

The Market Composite Index, the MBA’s measure of mortgage loan application volume, decreased 12.7% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the index was 11% lower with the previous week.

The seasonally adjusted Purchase Index decreased 7% from one week earlier while the unadjusted index was down by 6% – the latter was also 6% higher than the same week one year ago. The Refinance Index decreased 20% from the previous week and was 43% higher than the same week one year ago, while the refinance share of mortgage activity decreased to 37.3% of total applications from 41.3% the previous week.

Among the federal programs, the FHA share of total applications increased to 16.7% from 15.8% the week prior while the VA share of total applications decreased to 13.4% from 13.7% and the USDA share of total applications dipped to 0.4% from 0.5%.

Joel Kan, MBA’s vice president and deputy chief economist, blamed rising mortgage rates for the “20% drop in refinance applications, especially for higher balance loans, with the average loan size falling substantially. The refinance share of applications at 37.3% was the lowest since January. Similar to the previous week, economic uncertainty and rate volatility impacted prospective homebuyers as we saw a 7% decline in purchase applications. Both conventional and government purchase activity fell relative to the week before, but the overall level of purchase applications was still 6% higher than a year ago.”