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MBA: Mortgage Applications Decrease in Latest Weekly Survey

by Calculated Risk on 4/20/2022 07:00:00 AM

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

Mortgage applications decreased 5.0 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending April 15, 2022.

… The Refinance Index decreased 8 percent from the previous
week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent
compared with the previous week and was 14 percent lower than the same week one year ago.

“Ongoing concerns about rapid inflation and tighter US monetary policy continued to push Treasury yields
higher, driving mortgage rates to their highest level in over a decade. Rates increased across the board
for all loan types, with the 30-year fixed rate hitting 5.2%, the highest level since 2010,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “The 30-year rate has increased
70 basis points over the past month and is 2 full percentage points higher than a year ago. The recent
surge in mortgage rates has shut most borrowers out of rate/term refinances, causing the refinance index
to fall for the sixth consecutive week. In a housing market facing affordability challenges and low
inventory, higher rates are causing a pullback or delay in home purchase demand as well. Home
purchase activity has been volatile in recent weeks and has yet to see the typical pick up for this time of
the year.”

Added Kan: “The ARM share of applications reached 8.5% last week, its highest level since 2019. As
ARM loans typically have lower rates than fixed rate mortgages, and as this spread has widened, ARM
loans have become more attractive to borrowers already facing home purchase loan amounts close to
record highs.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 5.20 percent from 5.13 percent, with points increasing to 0.66 from 0.63
(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.
The refinance index is at the lowest level since February 2019.
The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 14% year-over-year unadjusted.

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

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