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After A Month Of Declines, Mortgage Applications Increase

David Krechevsky
Dec 14, 2022
Photo credit: Getty Images/phototechno

Both the purchase and refinance indexes rose last week despite a small increase in mortgage rates.

KEY TAKEAWAYS
  • The Market Composite Index increased 3.2% on a seasonally adjusted basis from a week earlier.
  • The seasonally adjusted Purchase Index increased 4% from a week earlier.
  • The Refinance Index increased 3% from the previous week.

Mortgage applications increased for the first time in a month, with both purchase and refinance applications rising as mortgage rates held in a narrow range, the Mortgage Bankers Association (MBA) said Wednesday.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 9, the Market Composite Index — a measure of mortgage loan application volume — increased 3.2% on a seasonally adjusted basis from a week earlier. Unadjusted, the Index increased 0.4% from the previous week. 

The seasonally adjusted Purchase Index increased 4% from a week earlier. Unadjusted, it decreased 1% from the previous week and was 38% lower than the same week one year ago.

The Refinance Index increased 3% from the previous week but was 85% lower than at the same point last year. 

Joel Kan, MBA’s vice president and deputy chief economist, said the 30-year fixed rate inched up to 6.42%, but noted that was still close to the lowest rate in a month.

“Mortgage rates increased slightly after a month of declines, as financial markets reacted to mixed signals regarding inflation and the Federal Reserve’s next policy moves,” Kan said.  “Overall applications increased, driven by increases in purchase and refinance activity. However, with rates more than three percentage points higher than a year ago, both purchase and refinance applications are still well behind last year’s pace.”

The Federal Reserve is scheduled to end its final two-day meeting of the year Wednesday afternoon and announce another increase in the benchmark federal funds rate, with most analysts expecting a 50-basis-point increase.

Kan added that the continuing moderation in home-price growth, “along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months.”

The refinance share of mortgage activity increased to 29.4% of total applications from 28.7% the previous week, while the adjustable-rate mortgage (ARM) share of activity increased to 7.7% of total applications.

The FHA share of total applications decreased to 13.1% from 13.7% the week prior. The VA share of total applications increased to 11.5% from 11.4% the week prior, and the USDA share of total applications remained unchanged at 0.6%.

Highlights of the report:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.42% from 6.41%, with points ticking up to 0.64 from 0.63 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 6.14% from 6.08%, with points decreasing to 0.42 from 0.5 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.4% from 6.39%, with points increasing to 1.03 from 0.93 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 5.92% from 5.84%, with points decreasing to 0.54 from 0.55 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 5.58% from 5.59%, with points decreasing to 0.8 from 0.91 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

MBA’s survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.

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