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MBA: Mortgage Applications Rose Last Week, But Refis Fell

David Krechevsky
Jan 12, 2022
mortgage application

The Refinance Index decreased 0.1% from the previous week and was 50% lower than the same week last year.

Mortgage applications rose last week, while refinance applications fell, according to the Mortgage Bankers Association’s weekly survey.

For the week ending Jan. 7, the Market Composite Index, a measure of mortgage loan application volume, increased 1.4% on  a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 46% compared with the previous week. The previous week’s results included an adjustment for the holidays, the MBA said.

The Refinance Index decreased 0.1% from the previous week and was 50% lower than the same week last year, the MBA said. 

The seasonally adjusted Purchase  Index increased 2% from one week earlier. The unadjusted Purchase Index increased 51% compared with the previous week and was 17% lower than the same week one year ago. 

“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling  of tighter policy ahead pushed U.S. Treasury yields higher,” said Joel Kan, MBA’s associate vice president of economic and  industry forecasting. “The 30-year fixed rate hit 3.52%, its  highest level since March 2020. Rates at these levels are quickly closing the door on refinance  opportunities for many borrowers.”

Kan noted that applications remained at their lowest level in over a month, and conventional refinance applications were at their  lowest level since January 2020.

“The housing market started 2022 on a strong note,” he said. “Both conventional and  government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5 %. MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand. However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.” 

The refinance share of mortgage activity was 64.1% of total applications, down from 65.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.1% of total  applications.

 The FHA share of total applications increased to 9.9% from 9.2% a week earlier. The VA share of total applications increased to 11.4% from 11.3% the previous week. The USDA share of total applications remained unchanged from 0.4% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.52% from 3.33%, with points decreasing to 0.45 from 0.48 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The MBA 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. Base period and value for all indexes is March 16, 1990=100.

The full report on the MBA’s survey is available at www.mba.org.

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