US DATA: Mortgage Apps Edge Higher, Remain Subdued Overall

Data released Wednesday showed MBA composite mortgage applications increased 0.5% in the week to Jun 16 (refis -2.1% after +6% the week prior, purchases +1.5% after +8%), the second increase in a row after four weekly declines, but a sharp slowdown from the 14-week high 7.2% prior.

• In terms of rates, we saw a third consecutive dip in the 30y conforming mortgage rate, to 6.73%, from 6.77% prior. But in contrast, the rate for jumbo loans increased 1bps to 6.80%, another fresh cycle high cycle.
• The regular-jumbo spread widened to 7bp from 2bp prior (the latter marked the first premium for Jumbo over regular for the first time since Dec'21). As the MBA report notes, this is potentially a sign of tighter conditions since March's banking turmoil, as jumbo lenders pull back.
• The broader picture is that overall mortgage activity has steadied out at very weak levels, after plummeting in early 2022 as mortgage rates increased from levels below 3.5% - discouraging refinancing in particular.
• While mortgage rates have dipped from highs above 7%, they remain elevated provide little reason to think there will be a significant pickup in mortgage apps in the near future.

30Y conforming rate (white), jumbo loan rate (blue) and spread (green)Source: MBA, Bloomberg