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Mortgage Applications Fall For 5th Straight Week

David Krechevsky
Sep 14, 2022
mortgage application

Homebuyers pull back as mortgage rates top 6% for first time since 2008.

KEY TAKEAWAYS
  • MBA’s Weekly Mortgage Applications Survey for the week ending Sept. 9, 2022 found the Market Composite Index decreased 1.2%.
  • The Refinance Index decreased 4% from the previous week and was 83% lower than the same week one year ago.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.01%.

Mortgage applications decreased for the fifth week, the Mortgage Bankers Association said Wednesday.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Sept. 9, 2022, the Market Composite Index — a measure of mortgage loan application volume — decreased 1.2% on a seasonally adjusted basis from one week earlier. The survey included an adjustment for the observance of Labor Day. 

Unadjusted, the index decreased 12% from the previous week, MBA said. 

The Refinance Index decreased 4% from the previous week and was 83% lower than the same week one year ago.

The seasonally adjusted Purchase Index increased 0.2% from a week earlier. Unadjusted, however, the Purchase Index decreased 12% compared with the previous week and was 29% lower than the same week one year ago.

“The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008 — rising to 6.01% — which is essentially double what it was a year ago,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Higher mortgage rates have pushed refinance activity down more than 80% from last year and have contributed to more homebuyers staying on the sidelines. Government loans, which tend to be favored by first-time buyers, bucked this trend and increased over the week, driven mainly by VA and USDA lending activity.”

The VA share of total applications increased to 11.3%, from 10.8% the previous week, while the USDA share of total applications increased to 0.7%, up from 0.6% the week prior, the MBA said. The FHA share of total applications increased to 13.4% from 13.3% the previous week. 

The refinance share of mortgage activity decreased to 30.2% of total applications from 30.7% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.1% of total applications.

Kan added, “The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The wide spread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.”

Other key highlights of the report:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.01% from 5.94%, with points decreasing to 0.76 from 0.79 (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 5.56% from 5.46%, with points decreasing to 0.39 from 0.40 (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 5.71% from 5.61%, with points increasing to 1.12 from 1.06 (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 5.30% from 5.23%, with points increasing to 0.89 from 0.86 (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 4.83% from 4.81%, with points decreasing to 0.52 from 0.88 (including the origination fee) for 80% LTV loans. The effective rate decreased 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. Base period and value for all indexes is March 16, 1990=100.

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