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THE MORTGAGE SEE-SAW: RATES RISE, APPLICATIONS FALL

Investors were forced to scrape by with one lonely tidbit of economic data on Wednesday courtesy of the Mortgage Bankers Association (MBA).

The too-long-didn't-read version: the cost of financing home loans rose last week and would-be borrowers, particularly those looking to refinance existing mortgages, had no bid for it.

The average 30-year fixed contract rate USMG=ECI increased by 9 basis points to settle at 6.65%, the highest since last August.

That prompted a negligible 0.4% dip in demand for loans to purchase homes USMGPI=ECI. Refi applications USMGR=ECI, on the other hand - which accounted for a diminishing 37.5% share of the mortgage pie - plunged by 18.1%.

Combined, home loan demand slumped by 8.5% last week.

"Many borrowers understandably backed away from refinancing last week,” said Joel Kan, MBA’s deputy chief economist. “Overall, refinance applications accounted for 38 percent of applications, the lowest share since June 2025.”

The 30-year fixed rate currently sits 33 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have grown by 4.7%, while refi demand has increased 18.9%.

MBA's mortgage demand, while relatively current, is still last week's data.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year in the future.

With that in mind, investors' view of the sector is improving.

While housing-related indexes - the S&P 1500 Homebuilding Index .SPCOMHOME and the PHLX Housing Sector Index .HGX - easily outperformed the broader market in the first two months of the year, that advantage evaporated in March when the U.S.-Israeli war on Iran pushed interest rates higher, taking mortgage rates with them.

The indexes moved in tandem with the S&P 500 through much of March and April, but have since become laggards.

Year-to-date, the SPCOMHOME and the HGX are down 4.1% and 2.6%, respectively. For its part, the S&P 500 .SPX is up 9.8% so far this year.

(Stephen Culp)

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