Mortgage Applications Dip As Refis Hit Lowest Level In 22 Years – NMP Skip to main content

Mortgage Applications Dip As Refis Hit Lowest Level In 22 Years

Nov 08, 2022
Photo credit: Getty Images/phototechno

MBA says Refinance Index is down 87%, Purchase Index is down 41% from last year.

KEY TAKEAWAYS
  • Purchase applications increased for the first time after six weeks of declines, but remained close to 2015 lows.
  • Refinances continued to fall, with the index hitting its lowest level since August 2000.

The volume of mortgage applications barely budged last week from a week earlier, as refinance applications fell to the lowest level in 22 years, according to the Mortgage Bankers Association (MBA). 

The MBA’s Weekly Mortgage Applications Survey for the week ending Nov. 4 found that the Market Composite Index — a measure of mortgage loan application volume — dipped just 0.1% on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the index decreased 2% from the previous week.

The Refinance Index decreased 4% from the previous week, and was 87% lower than the same week last year. 

The seasonally adjusted Purchase Index, however, increased 1% from a week earlier. The unadjusted Purchase Index decreased 1% from the previous week and was 41% lower than the same week one year ago.

“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat high inflation,” said Joel Kan, the MBA’s vice president and deputy chief economist. “The 30-year fixed rate remained above 7% for the third consecutive week, with increases for most loan types.”

Kan noted that purchase applications increased for the first time after six weeks of declines, but remained close to 2015 lows, “as homebuyers remained sidelined by higher rates and ongoing economic uncertainty. Refinances continued to fall, with the index hitting its lowest level since August 2000.”

The refinance share of mortgage activity decreased to 28.1% of total applications, falling from 28.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 12% of total applications.

The FHA share of total applications decreased to 13.3% from 13.5% the previous week. The VA share of total applications remained unchanged from a week earlier at 10.3%. The USDA share of total applications also remained unchanged, at 0.5%.

Other highlights from the MBA’s report:

  • The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.14% from 7.06%, with points increasing to 0.77 from 0.73 (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 with jumbo loan balances (greater than $647,200) decreased to 6.5% from 6.55%, with points increasing to 0.78 from 0.7 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. 
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.86% from 6.7%, with points increasing to 1.37 from 1.18 (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 6.4% from 6.37%, with points increasing to 1.13 from 1.05 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 5.87% from 5.79%, with points increasing to 0.92 from 0.90 (including the origination fee) for 80% LTV loans. The effective rate increased 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.

About the author
David Krechevsky was an editor at NMP.
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