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MBA: Mortgage Applications Decrease in Latest Weekly Survey; Lowest Level Since 1997

by Calculated Risk on 10/26/2022 07:00:00 AM

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

Mortgage applications decreased 1.7 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending October 21, 2022.

… The Refinance Index increased 0.1 percent from the previous
week and was 86 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 3 percent
compared with the previous week and was 42 percent lower than the same week one year ago.

“Mortgage rates increased for the 10th consecutive week, with the 30-year fixed rate reaching 7.16
percent, the highest rate since 2001. The ongoing trend of rising mortgage rates continues to depress
mortgage application activity, which remained at its slowest pace since 1997,” said Joel Kan, MBA’s Vice
President and Deputy Chief Economist. “Refinance applications were ess entially unchanged, but
purchase applications declined 2 percent to the slowest pace since 2015 – over 40 percent behind last
year’s pace. Despite higher rates and lower overall application activity, there was a slight increase in FHA
purchase applications, as FHA rates remained lower than conventional loan rates.”

Added Kan, “MBA’s forecast expects both economic and housing market weakness in 2023 to drive a 3
percent decline in purchase originations, while refinance volume is anticipated to decline by 24 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 7.16 percent from 6.94 percent, with points decreasing to 0.88 from 0.95
(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 this year.
The refinance index is at the lowest level since the year 2000.
The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 42% year-over-year unadjusted.
The purchase index is 12% below the pandemic low and at the lowest level since 2015.

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

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