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MBA: Mortgage Applications Decrease in Latest Weekly Survey

by Calculated Risk on 3/23/2022 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 8.1 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending March 18, 2022.

… The Refinance Index decreased 14 percent from the previous
week and was 54 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent
compared with the previous week and was 12 percent lower than the same week one year ago.

“Rates on 30-year conforming mortgages jumped by 23 basis points last week, the largest weekly
increase since March 2020. The jump in rates comes as markets moved to price in a much faster pace of
rate hikes, as well as expectations of fewer MBS purchases from the Federal Reserve. With mortgage
rates now at 4.5 percent, compared to rates at or below 3 percent not that long ago, it is no surprise that
refinance volume has dropped by more than 50 percent compared to this time last year. MBA’s new
March forecast expects mortgage rates to continue to trend higher through the course of 2022,” said Mike
Fratantoni, MBA’s Senior Vice President and Chief Economist. “Purchase application volume was down
slightly for the week, with a larger drop in FHA and VA purchase volume, and a small decline in
conventional purchase loans. First-time homebuyers, who rely on these government programs, are
increasingly challenged by both the rapid increase in home prices and higher mortgage rates. Repeat
homebuyers, who are more likely to use conventional loans, benefit from the gains in home equity
realized on a sale which can be used to fuel their next purchase, even with rates moving higher.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 4.50 percent from 4.27 percent, with points increasing to 0.59 from 0.54
(including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index has declined sharply over the last several months and is at the lowest level since December 2019.
Refinance activity will likely decline further in the survey next week since mortgage rates increased again this week.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 12% year-over-year unadjusted.

Note: Red is a four-week average (blue is weekly).

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