Applications for both new mortgages and refinanced loans fell last week from a week earlier, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending Feb. 4, 2022.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1% percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, the Index decreased 6% from a week earlier.
The Refinance Index also decreased, dropping 7% from a week earlier and 52% from the same week last year.
The seasonally adjusted Purchase Index fell 10% from a week earlier. The unadjusted Purchase Index decreased 3% from the previous week and was 12% lower than the same week last year.
"Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83%,”said Joel Kan, MBA's associate vice president of economic and industry forecasting. “Rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies.”
Kan noted that rates are 87 basis points higher than the same week a year ago, causing refinance applications to continue to fall.
"Purchase activity slowed after the previous week's gain,” he said.”Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10 percent.”
He said the average loan size hit yet another record high, at $446,000. “Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers," he said.
The refinance share of mortgage activity decreased to 56.2% of total applications, down from 57.3% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.5% of total applications.
The FHA share of total applications increased to 8% from 7.7% the previous week. The VA share of total applications increased to 10% from 9.1% a week earlier. The USDA share of total applications remained unchanged at 0.4% from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.83% from 3.78%, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80% loan-to-value ratio (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 3.93% from 3.86%, with points decreasing to 0.54 from 0.55 (including the origination fee) for 80 percent 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.
