Mortgage Applications Rise For 2nd Straight Week – NMP Skip to main content

Mortgage Applications Rise For 2nd Straight Week

Dec 21, 2022
mortgage application

The 0.9% overall increase was led by refinancing mortgages as mortgage rates fell.

KEY TAKEAWAYS
  • The Market Composite Index increased 0.9% on a seasonally adjusted basis.
  • The Refinance Index increased 6%, but was still 85% lower than the same week one year ago.
  • The 30-year conforming mortgage rate reaching 6.34% — its lowest level since September

Mortgage applications rose for the second consecutive week as mortgage rates fell, the Mortgage Bankers Association (MBA) said Wednesday.

According to data from the MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 16, the Market Composite Index — a measure of mortgage loan application volume — increased 0.9% on a seasonally adjusted basis from a week earlier. Unadjusted, the Index decreased 1% from the previous week. 

The overall increase was led by the Refinance Index, which increased 6% from the previous week, though it was still 85% lower than the same week one year ago.

The seasonally adjusted Purchase Index slipped 0.1% from a week earlier, while the unadjusted Purchase Index decreased 3%, and was 36% below a year earlier.

“The Federal Reserve raised its short-term rate target last week, but longer-term rates, including mortgage rates, declined for the week, with the 30-year conforming rate reaching 6.34% — its lowest level since September,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “This is a particularly slow time of year for home-buying, so it is not surprising that purchase applications did not move much in response to lower mortgage rates.”

He added, “The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession. However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”

Key Highlights

  • The refinance share of mortgage activity increased to 31.3% of total applications from 29.4% the previous week. 
  • The adjustable-rate mortgage (ARM) share of activity decreased to 7.5% of total applications.
  • The FHA share of total applications dipped to 13% from 13.1% the previous week. 
  • The VA share of total applications increased to 11.9% from 11.5% the week prior. 
  • The USDA share of total applications remained unchanged at 0.6%.

Mortgage Rates

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.34% from 6.42%, with points decreasing to 0.59 from 0.64 (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) decreased to 5.97% from 6.14%, with points increasing to 0.53 from 0.42 (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 decreased to 6.35% from 6.4%, with points decreasing to 0.99 from 1.03 (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 decreased to 5.81% from 5.92%, with points decreasing to 0.53 from 0.54 (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 5.43% from 5.58%, with points increasing to 0.95 from 0.80 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

MBA’s weekly survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.

About the author
David Krechevsky was an editor at NMP.
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