Mortgage Apps: Refis Plunge Further, Purchases Hold Up

Bottom Line:  Mortgage rates pushed higher last week with the average effective rate hitting nearly 5%. Current coupon yields in the secondary market were up 47bps last week, closing at 3.71%, but were down -14bps this week through Tuesday. Applications for refinancing tumbled to the lowest levels since the pandemic but were still just above the lows seen in 2019. Purchase applications were firm last week as buyers likely rushed to close deals ahead of higher mortgage rates. On a trend basis, purchase activity has been remarkably resilient to higher rates. For now, purchase activity is running near late 2019 levels and still well above the lows of 2018. Overall, higher mortgage rates are weighing on mortgage activity as expected, but purchase volumes remain resilient amid continued strong demand. Finally, it is important to note that mortgage spreads to Treasuries have stabilized at wider levels, suggesting the sharp acceleration higher in mortgage rates might be losing momentum.

The MBA Mortgage Application Index FELL sharply, DOWN -8.1% to 456.0, BELOW the 13-week average of 539.0 and -38.9% BELOW the year-ago level. Non-seasonally adjusted the index FELL -7.5%.
 
The Purchase Index FELL -1.5% to 265.0, BELOW the 13-week average of 281.0 and -12.1% BELOW the year-ago level.
 
The Refinancing Index FELL sharply , DOWN -14.4% to 1523.0, BELOW the 13-week average of 2031.0 and -54.2% BELOW the year-ago level.
 
The effective (adjusted for points paid) 30-year mortgage rate ROSE sharply, UP 26bps to 4.68%, ABOVE the 13-week average of 4.0% and 34bps ABOVE the year-ago level.