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Mortgage Applications Post Slight Rebound With 2.5% Increase

Keith Griffin
May 04, 2022
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Refi manages to hold steady week-to-week but still shows major year-over-year drop.

KEY TAKEAWAYS
  • Mortgage loan application volume increased 2.5% on a seasonally adjusted basis from a week earlier.
  • The seasonally adjusted Purchase Index increased 4% from a week earlier.
  • The ARM share of the market remained unchanged at around 9%.

Data released this morning from the Mortgage Bankers Association shows mortgage applications demonstrating a slight rebound with a 2.5% increase from the prior week. The refinance index, which has been plummeting with the increase in interest rates, also managed to show a slight uptick.

“Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "The 30-year fixed rate was 5.36%, up over 2 percentage points from a year ago. The 127-basis-point jump in rates over the past two months has triggered a 49% drop in refinance activity."

The last time the MBA reported an increase in mortgage loan applications was the last week of January, when 30-year fixed mortgages were around 3.55%.

An MBA spokesperson said that, in general, the bump up could be from borrower expectations that rates will go even higher.

The MBA says its Market Composite Index, a measure of mortgage loan application volume, increased 2.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week. 

The Refinance Index increased 0.2% from the previous week but was 71% lower than the same week last year. The seasonally adjusted Purchase Index increased 4% from a week earlier. The unadjusted Purchase Index increased 5% from the previous week but was 11% lower than the same week last year.

“Purchase applications increased for conventional, FHA, and VA loans and were up 4% overall. This is potentially a good sign for the spring home buying season, which has seen a slow start thus far," Kan said. "The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments. The ARM (adjustable rate mortgage) share remained unchanged at around 9%, which is well below the 30% mark observed in the mid-2000s.”

The refinance share of mortgage activity decreased to 33.9% of total applications from 35% the previous week. The ARM share of activity remained unchanged at 9.3% of total applications.

The FHA share of total applications increased to 11.1% from 10.6% the previous week. The VA share of total applications increased to 10.3% from 10.2% the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.36% from 5.37%, with points decreasing to 0.63 from 0.67 (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 4.92% from 4.89%, with points decreasing to 0.43 from 0.47 (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 decreased to 5.27% from 5.29%, with points decreasing to 0.85 from 0.88 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.68%, with points decreasing to 0.76 from 0.8 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 4.25% from 4.28%, with points increasing to 0.78 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

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