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Mortgage Applications and Interest Rates Both Decline Again

Steve Goode
May 31, 2022
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According to the latest Mortgage Bankers Association weekly mortgage application survey, applications decreased by 2.3% from last week.

KEY TAKEAWAYS
  • The refinance index decreased 5% from the previous week and was 75% lower than the same week one year ago.
  • The 30-year fixed rate declined for the second straight week to 5.46% but remains well above what borrowers were used to over the past two years. 

Mortgage applications, like mortgage interest rates, are down again. Applications were at their lowest level in three-and-a-half years.

According to the latest Mortgage Bankers Association weekly mortgage application survey, applications decreased by 2.3% from the prior week. On an unadjusted basis, the Index decreased 3% compared with the previous week.

The bright spot in the marketplace is high-end borrowers. The MBA survey shows demand is stronger in that segment, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers.

“Mortgage rates fell for the fourth time in five weeks, as concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower. Mortgage applications decreased to its lowest level since December 2018, as the purchase market continues to struggle with supply and affordability challenges,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “With the 30-year fixed rate at 5.33%, the refinance market continues to shrink, led by larger decreases last week for FHA and VA refinance applications. The refinance index was 75% below last year’s level, when rates were more than 200 basis points lower.” Kan said purchase applications last week were 14% lower than last year.

According to the survey, the refinance share of mortgage activity decreased to 31.5% of total applications from 32.3% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.7% of total
applications.

Other highlights of the survey included (all from week prior):

  • The FHA share of total applications decreased to 10.8% from 11.3%.
  • The VA share of total applications decreased to 10.2% from 10.4%.
  • The USDA share of total applications remained unchanged at 0.5%.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.33% from 5.46%, with points decreasing to 0.51 from 0.60 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 4.93% from 5.02%, with points remaining unchanged at 0.41 (including the origination fee) for 80% LTV loans.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.20% from 5.36%, with points decreasing to 0.69 from 0.82 (including the origination fee) for 80% LTV loans.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.59% from 4.72%, with points decreasing to 0.63 from 0.70 (including the origination fee) for 80% LTV loans.
  • The average contract interest rate for 5/1 ARMs decreased to 4.46% from 4.49%, with points decreasing to 0.68 from 0.76 (including the origination fee) for 80% LTV loans.

 

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