Mortgage applications decreased for the second time in three weeks last week, as interest rates increased, the Mortgage Bankers Association (MBA) said Wednesday.
According to the MBA’s Weekly Mortgage Applications Survey for the week ended Feb. 10, the Market Composite Index — a measure of mortgage loan application volume — decreased 7.7% on a seasonally adjusted basis from the previous week. Unadjusted, the index decreased 7% from the previous week.
The Refinance Index decreased 13% from the previous week and was 76% lower than the same week one year ago, the MBA said.
The seasonally adjusted Purchase Index decreased 6% from a week earlier. Unadjusted, the Purchase Index decreased 5% from the previous week and was 43% lower than the same week one year ago.
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” said Joel Kan, MBA’s vice president and deputy chief economist.
“After five straight weeks of decreases,” he continued, “the 30-year fixed rate increased by 21 basis points to 6.39%. Mortgage applications decreased for the second time in three weeks because of these higher rates. Refinance borrowers, both rate/term and cash-out, remain on the sidelines as current rates provide little financial incentive to act.”
Kan added that purchase applications fell to their lowest level since the beginning of the year, and were more than 40% lower than a year ago.
“Potential buyers remain quite sensitive to the current level of mortgage rates, which are more than 2 percentage points above last year’s levels and have significantly reduced buyers’ purchasing power,” he said.
The refinance share of mortgage activity decreased to 32% of total applications from 33.9% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9% of total applications.
The FHA share of total applications increased to 12.6% from 11.9% the week prior. The VA share of total applications decreased to 12.6% from 13.4% the week prior. The USDA share of total applications has remained unchanged at 0.6% since the start of the year.
Mortgage Rates
Note: The points listed include the origination fee and are for 80% loan-to-value ratio loans.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.39% from 6.18%, with points increasing to 0.70 from 0.64. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.26% from 5.96%, with points decreasing to 0.43 from 0.55. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.25% from 6.14%, with points increasing to 1.14 from 0.88. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 5.85% from 5.64%, with points increasing to 0.81 from 0.63. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 5.53% from 5.56%, with points decreasing to 0.72 from 0.80. The effective rate decreased from last week.
The 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.
