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Mortgage Applications Fall For 2nd-Straight Week

David Krechevsky
Aug 24, 2022
mortgage application

Remain at 22-year low as refinancing applications continue to decline.

KEY TAKEAWAYS
  • The Market Composite Index — a measure of mortgage loan application volume — decreased 1.2% on a seasonally adjusted basis from a week earlier.
  • The Refinance Index, meanwhile, decreased 3% from the previous week and was 83% lower than the same week last year. 
  • The seasonally adjusted Purchase Index decreased 1% from one week earlier.

Mortgage applications decreased for the second straight week, remaining at a 22-year low as refinancing applications continued to plunge, the Mortgage Bankers Association said today.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Aug. 19, 2022, the Market Composite Index — a measure of mortgage loan application volume — decreased 1.2% on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the index decreased 3% from the previous week. 

The Refinance Index, meanwhile, decreased 3% from the previous week and was 83% lower than the same week last year. 

The seasonally adjusted Purchase Index decreased 1% from one week earlier. Unadjusted, the Purchase Index fell 2% from the previous week and was 21% lower than a year earlier.

“Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Last week’s purchase results varied, with conventional applications declining 2% and government applications increasing 4%, which is potentially a sign of more first-time homebuyer activity. The average purchase loan size continued to trend lower, as purchase activity at the high end of the market is weakening.” 

Kan added that mortgage rates increased for all loan types last week, with the benchmark 30-year fixed-rate mortgage jumping 20 basis points to 5.65% — the highest in nearly a month. 

“The spread between conforming fixed-rate loans and ARM (adjustable-rate mortgage) loans narrowed to 84 basis points from over 100 basis points the prior week,” he said. “This movement made fixed-rate loans relatively more attractive than ARMs, thereby reducing the ARM share further from highs seen earlier this year.”

Some key highlights of the report: 

  • The refinance share of mortgage activity decreased to 31.1% of total applications from 31.2% the previous week. 
  • The ARM share of activity decreased to 6.5% of total applications.
  • The FHA share of total applications increased to 12.5% from 12% the week prior. 
  • The VA share of total applications increased to 11.6% from 11.2% the week prior. 
  • The USDA share of total applications increased to 0.7% from 0.6% the week prior.

How interest rates changed:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.65% from 5.45%, with points increasing to 0.68 from 0.57 (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) increased to 5.28% from 5.14%, with points increasing to 0.58 from 0.33 (including the origination fee) for 80% 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 5.43% from 5.38%, with points increasing to 1.10 from 1.01 (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 5.01 percent from 4.87%, with points increasing to 0.84 from 0.64 (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 4.81% from 4.43%, with points increasing to 0.74 from 0.43 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

MBA’s Weekly Applications 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.

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