Mortgage Applications Fall by Most in a Month

Application volume fell in the last week of January despite easing rates

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Mortgage applications for U.S. home purchases fell by the most in a month last week despite falling rates, according to data from the Mortgage Bankers Association. 

Key Takeaways

  • Mortgage applications during the week ending Jan. 27 fell 9% from a week earlier, according to a recent Mortgage Bankers Association survey.
  • Winter is typically a slow month when it comes to home buying, experts say.

Refinance and purchase applications fell 9% from a week earlier when seasonally adjusted, even as mortgage rates retreated further from their 2022 highs, according to MBA's survey. The MBA Purchase Index, a measure of application volume for home purchases, declined 10% on a seasonally adjusted basis from the week prior. The index was 41% lower than the same week a year ago.

“Mortgage rates declined for the fourth straight week and have now fallen almost 40 basis points over the past month,” Joel Kan, the vice president of MBA and the group’s deputy chief economist, said in a news release. 

According to the data from MBA, the average contract interest rate for 30-year fixed-rate mortgages with loan balances less than $726,000 decreased to 6.19% from 6.2% over the week. Rates for loan balances greater than $762,000 increased to 5.99% from 5.92%.

Kan pointed to the narrowing spread between 10-year Treasurys and mortgage rates as a promising sign for hopeful borrowers. “Further narrowing of that spread is expected to put downward pressure on mortgage rates in the coming months,” Kan said.  

Winter is typically a slow time of year for the housing industry. Home purchases typically pick up in the spring months, which Kan said could bring more favorable conditions for buyers.

“Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth. Both trends will help some buyers regain purchasing power,” he said. 

Existing home sales declined for the 11th consecutive month in December, falling 1.5% from November and 34% from a year ago.

Mortgage Lender Job Cuts

The dropoff in mortgage applications has taken its toll on the industry.

Rocket, one of the nation’s largest mortgage lenders, announced its second round of layoffs in a matter of weeks last Tuesday when it eliminated 50 positions. The company lost its title as the nation’s largest mortgage originator in the fourth quarter after reporting losses in the third quarter of 2022. 

Wells Fargo (WFC) began implementing layoffs in its home lending department in April 2022 after the bank announced a 33% drop in its mortgage revenue. 

Article Sources
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  1. Mortgage Bankers Association. "Mortgage Applications Decrease in Latest MBA Weekly Survey."

  2. National Association of Realtors. "Existing Home Sales Receded 1.5% in December."

  3. Housing Wire. "Rocket eliminates about 50 jobs in its second round of layoffs for 2023."

  4. Rocket Companies, Inc. "Rocket Companies Announce Third Quarter Results."

  5. Des Moines Register. "Wells Fargo profits cut in half as Des Moines-based mortgage business dives."

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