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Mortgage Applications At Lowest Level In 22 Years

David Krechevsky
Aug 17, 2022
Applications for home loans all but dried up, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Nov. 11

MBA economist says purchase activity may pick up if mortgage rates continue to move lower.

KEY TAKEAWAYS
  • The Market Composite Index decreased 2.3% to its lowest level since 2000.
  • The Refinance Index decreased 5% from the previous week to its lowest level since November 2000.

Mortgage applications fell last week to their lowest level in 22 years, as demand for buying homes continues to decline, the Mortgage Bankers Association said today.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Aug. 12, 2022, the Market Composite Index — a measure of overall mortgage loan application volume — decreased 2.3% on a seasonally adjusted basis from a week earlier. 

The Refinance Index decreased 5% from the previous week and was 82% lower than the same week last year, the MBA said. 

The seasonally adjusted Purchase Index decreased 1% from one week earlier. 

“Mortgage application activity was lower last week, with overall applications declining over 2% to their lowest level since 2000,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines.”

“However,” he continued, “if home price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year.”

Kan said the rate for a 30-year fixed mortgage stayed at 5.45%, more than 2 percentage points higher than a year ago, but was down over 50 basis points from the June 2022 high of 5.98%, “providing some relief for buyers in the market. The refinance index, however, fell 5% to its lowest level since November 2000, driven by a 6% drop in conventional refinance applications.”

Some key highlights of the report:

  • The refinance share of mortgage activity was 31.2% of total applications, down from 32% a week earlier. 
  • The adjustable-rate mortgage (ARM) share of activity fell to 7% of total applications.
  • The FHA share of total applications dipped to 12% from 12.1% the previous week. 
  • The VA share of total applications increased to 11.2% from 10.9% the previous week. 
  • The USDA share of total applications remained unchanged at 0.6%.

The survey also highlighted the current state of mortgage rates:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.45% from 5.47%, with points decreasing to 0.57 from 0.8 (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) increased to 5.14% from 5.09%, with points decreasing to 0.33 from 0.59 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 5.38% from 5.35%, with points decreasing to 1.01 from 1.02 (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 4.87% from 4.74%, with points increasing to 0.64 from 0.62 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 4.43% from 4.6%, with points decreasing to 0.43 from 0.63 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The 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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