
Mortgage Applications Down 8.1% In Weekly Survey

MBA economist: With mortgage rates now at 4.5%, “it is no surprise that refinance volume has dropped by more than 50% compared to this time last year.”
- The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1% on a seasonally adjusted basis from one week earlier.
- The Refinance Index decreased even more, falling 14% from the previous week. It also was down 54% from the same week last year.
Mortgage applications fell last week as interest rates increased the most in two years, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 18, 2022.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 8% from the previous week.
The Refinance Index decreased even more, falling 14% from the previous week. It also was down 54% from the same week last year. The seasonally adjusted Purchase Index dipped 2% from a week earlier, while the unadjusted Purchase Index was down 1% from the previous week and 12% from the same week last year.
"Rates on 30-year conforming mortgages jumped by 23 basis points last week, the largest weekly increase since March 2020,” said Mike Fratantoni, MBA's senior vice president and chief economist. “The jump in rates comes as markets moved to price in a much faster pace of rate hikes, as well as expectations of fewer MBS (mortgage-backed securities) purchases from the Federal Reserve.”
Fratantoni said that with mortgage rates now at 4.5%, compared to rates at or below 3% not that long ago, “it is no surprise that refinance volume has dropped by more than 50% compared to this time last year.”
He said MBA's new March forecast expects mortgage rates to continue to trend higher throughout 2022
"Purchase application volume was down slightly for the week, with a larger drop in FHA and VA purchase volume and a small decline in conventional purchase loans.” Fratantoni said. “First-time homebuyers, who rely on these government programs, are increasingly challenged by both the rapid increase in home prices and higher mortgage rates. Repeat homebuyers, who are more likely to use conventional loans, benefit from the gains in home equity realized on a sale, which can be used to fuel their next purchase, even with rates moving higher."
The refinance share of mortgage activity decreased to 44.8% of total applications, down from 48.4% a week earlier, the MBA said. The adjustable-rate mortgage (ARM) share of activity increased to 6.4% of total applications, it said.
The FHA share of total applications increased to 8.8% from 8.7% the previous week. The VA share of total applications decreased to 9.8% from 10.5% a week earlier. The USDA share of total applications dipped to 0.4% from 0.5% the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.5% from 4.27%, with points increasing to 0.59 from 0.54 (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 15-year fixed-rate mortgages increased to 3.76% from 3.55%, with points increasing to 0.55 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.