In the latest update on the housing market, mortgage demand has taken a downward turn as rates reach their highest levels since November 2023. According to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey, applications decreased by 2.3% on a seasonally adjusted basis during the week ending April 26.
Joel Kan, MBA’s vice president and deputy chief economist, highlighted the impact of inflation on market sentiments, stating, “Inflation remains stubbornly high, and this trend is convincing markets that rates, including mortgage rates, are going to stay higher for longer." Kan noted a significant increase in the 30-year fixed mortgage rate to 7.29%, emphasizing its effect on the housing and mortgage markets.
Notably, the survey revealed a rising trend in adjustable-rate mortgages (ARMs), reaching their highest level for the year at 7.8%. Kan explained, “Prospective homebuyers are looking for ways to improve affordability, and switching to an ARM is one means of doing that, with ARM rates in the mid-6% range for loans with an initial fixed period of 5 years.”
Purchase loan application volume declined by 2% from the previous week, while refinance volume dropped by 3%. The refinance share of mortgage activity decreased to 30.2% of total applications, down from 30.8% the prior week.
In terms of mortgage rates, the survey indicated an increase in the average rate for 30-year fixed loans with conforming balances to 7.29%. Meanwhile, rates on jumbo loans decreased week over week to 7.39%.
Wednesday's update from HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.57%, highlighting a continuous upward trend in mortgage rates.
As buyers navigate the challenging market conditions, the shift towards adjustable-rate mortgages reflects a strategy to cope with rising rates and improve affordability. With mortgage rates at their highest levels in months, prospective homeowners are exploring alternative financing options to achieve their homeownership goals.