“The ARM share held steady as ARM rates remained almost a full percentage point lower than the 30-year fixed rate, giving qualified borrowers a lower rate option to purchase a home,” Kan added. This spread between fixed and adjustable products has become a critical factor for those still attempting to navigate the market, though it has not been sufficient to offset the overall decline in volume.
The breakdown of total mortgage activity by loan type showed minor shifts in market share. The refinance share of mortgage activity increased to 39% of total applications, up from 37.7% the previous week. While the refinance index itself fell, its share of the total pool grew because purchase applications declined at a faster rate.
Government-backed loan programs also saw slight fluctuations in their share of the market. The Federal Housing Administration (FHA) share of total applications decreased slightly to 16.3% from 16.4% the week prior. The U.S. Department of Veterans Affairs (VA) share of total applications saw a more pronounced drop, falling to 11.5% from 11.9% the previous week. The U.S. Department of Agriculture (USDA) share, which typically accounts for a small fraction of the market, decreased to 0.5% from 0.6%.
The specific movement in interest rates provided some relief, even if it did not immediately translate into higher application volumes. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) decreased to 7.41% from 7.50%. Points for these loans remained stable, though the modest drop represents the first downward movement after eight consecutive weeks of increases.
In the jumbo market—loans with balances exceeding $832,750—the average contract interest rate for 30-year fixed-rate mortgages decreased more significantly, falling to 7.33% from 7.49%. This tightening of the spread between conforming and jumbo rates suggests a slight shift in liquidity or risk appetite within the private-label securities market and among portfolio lenders.
Other loan products also saw downward adjustments. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 7.13% from 7.19%. Shorter-term financing also became slightly more affordable, with the average rate for 15-year fixed-rate mortgages decreasing to 6.73% from 6.87%. Finally, the average contract interest rate for 5/1 ARMs decreased to 6.46% from 6.54%.
Xactus Mortgage Intent Index
While the MBA data provides a comprehensive look at submitted applications, other industry metrics suggest that borrower interest is waning even before the application stage. The Xactus Mortgage Intent Index—which analyzes aggregated, anonymized credit-pull activity across the Xactus Intelligent Verification Platform—fell to a reading of 96.9.
