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Mortgage Applications Drop 11% From Week To Week

Keith Griffin
May 18, 2022
Bob Broeksmit, CMB, MBA President and CEO
Bob Broeksmit, CMB, MBA President and CEO, predicts 2022 will be a record year for purchase volume
National Mortgage Professional

MBA predicts 2022 will still be a record year for purchase volume

KEY TAKEAWAYS
  • The Market Composite Index, a measure of mortgage loan application volume, decreased 11% on a seasonally adjusted basis from one week earlier.
  • The Refinance Index decreased 10% from the previous week and was 76% lower than the same week one year ago.
  • The unadjusted Purchase Index decreased 12% compared with the previous week and was 15% lower than the same week one year ago.

Mortgage applications dropped 11% last week, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 13, 2022. Higher interest rates and worsening affordability are the main drivers of the increase.

That’s the first time in the last three weeks the number of applications has dropped. Bob Broeksmit, CMB, MBA President and CEO, indicated earlier this week, though that the drop in applications doesn’t portend a bad year necessarily for originators.

Speaking at the MBA’s 2022 Secondary & Capital Markets Conference & Expo, Broeksmit said that “2022 will still be a record year for purchase volume. The number of units will fall a little compared to last year, but the dollar amount of new purchase loans will rise to a record due to the steady increase in home prices.” The MBA forecasts total volume will be $2.6 trillion, one of the mortgage industry’s eight best years.

In announcing the Market Composite Index today, Joel Kan, MBA’s associate vice president of economic and industry forecasting, said, “Purchase applications fell 12% last week, as prospective homebuyers have been put off by higher rates and worsening affordability conditions. Furthermore, general uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search.”

Added Kan, “These results were consistent with MBA’s May forecast released earlier this week, which now calls for fewer home sales and mortgage originations in 2022 compared to a year ago.”

The Market Composite Index, a measure of mortgage loan application volume, decreased 11% on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 10% from the previous week and was 76% lower than the same week one year ago. The unadjusted Purchase Index decreased 12% compared with the previous week and was 15% lower than the same week one year ago.

The refinance share of mortgage activity increased to 33% of total applications from 32.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 10.3% of total applications.

The FHA share of total applications increased to 11.1% from 10.5% the week prior. The VA share of total applications remained unchanged at 10.5%. 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 5.49% from 5.53%, with points increasing to 0.74 from 0.73 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 5.03% from 5.08%, with points increasing to 0.61 from 0.42 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

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