April 17 2025

The Mortgage Bankers Association's (MBA) mortgage application survey was at the highest combined level since October in last week's data--a move largely driven by the a sharp drop in interest rates (incidentally, also to the best levels since October). The rate drop was part of the initial market reaction to the April 2nd tariff announcement, but it didn't last. Panic and uncertainty can be good for rates.  In fact, it usually is.  But when there's panic and uncertainty that involves the bond market itself, rates can move paradoxically higher, as they did last week.  In fact, the average 30yr fixed rate rose by half a percent from Friday to Friday. The MBA's rate tracking is weekly and survey-based, so it won't show as much volatility as daily numbers. Nonetheless, it was up 0.20%. “Mortgage rates moved 20 basis points higher last week, abruptly slowing the pace of mortgage application activity with refinance volume dropping 12 percent and purchase volume falling 5 percent for the week. Purchase volume remains almost 13 percent above last year’s level, but economic uncertainty and the volatility in rates is likely to make at least some prospective buyers more hesitant to move forward with a purchase,” said Mike Fratantoni, MBA’s SVP and Chief Economist. In the recent context, both refi and purchase demand remain much closer to the top of the range, despite this week's pull-back. Fratantoni also noted an uptick in the prevalence of ARMs (adjustable rate mortgages), "The ARM share at 9.6 percent was the highest since November 2023, and this reflects the share of units. On a dollar basis, almost a quarter of the application volume last week was for ARMs, as borrowers with larger loans are even more likely to opt for an ARM.”

April 04 2025

The Mortgage Bankers Association (MBA) released the latest mortgage application data this week showing a modest 1.6% decrease from the previous week.  A slight uptick in purchase applications was more than offset by a downtick in refi applications, but both remain in solid territory relative to the prevailing range and interest rate environments. Purchase demand is doing especially well in the recent context.  This week's improvement makes it one of the best 6 weeks in more than a year. The most optimistic way to approach these numbers would be to say that purchase demand looks to have bottomed out in the bigger picture and is now waiting for motivation to bounce back.  When that happens, no one is under much of an illusion that volume would go back to the highs from a few years ago, but even recapturing a fraction of that range would make for a meaningfully more active housing market. Refinance demand, as always, is very closely tied to interest rate volatility. Last week's rates moved higher and were near the highest levels in more than a month at one point.  As such, it's no surprise to see a bit of a slide in the refi index. If anything, it's refreshing to see how resilient the numbers have been. While we are no great fans of predicting the future, there's a strong possibility that next week's refi numbers will be noticeably higher.  That's not hard to imagine given that rates fell to the lowest levels since October by the end of the week. 

March 28 2025

The National Association of Realtors' Pending Home Sales Index (PHSI) tracks purchase contract signings that have not yet turned into Existing Home Sales. Things haven't been going well for either sales metric for more than 2 years now--a problem that can be blamed on a combination of factors led by it's proximity to the sharpest interest rate spike in decades. That's the bad news. The good news is that things actually haven't gotten markedly worse after the initial swan dive in 2022. This, of course, means that the sales index is free to experience some ups and downs inside the broadly sideways, severely depressed range. The most recent installment amounts to a half smile on an otherwise perpetually sad face.  Well, maybe a quarter smile... According to NAR Chief Economist Lawrence Yun, "Despite the modest monthly increase, contract signings remain well below historical levels. A meaningful decline in mortgage rates would help both demand and supply—demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect." Here's a regional breakdown showing the percent change in Pending Sales from the previous month: Northeast: -0.9% Midwest:   +0.7% South:      +6.2% West:        -3.0% And now the percent change from the previous year: Northeast: -2.5% Midwest:   -4.7% South:      -3.4% West:        -3.5%