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Mortgage Applications On The Rise Despite Interest Rates

Steve Goode
May 11, 2022
Mortgage Bankers Association Logo

Second consecutive weekly increase, according to MBA's survey.

Despite a ongoing rise in interest rates, prospective home buyers are seeking an increasing number of mortgage applications for purchase and adjustable rate mortgages.

According to the Mortgage Bankers Association’s Weekly Mortgage Application Survey, applications for mortgages went up 2% from the previous week on a seasonally adjusted basis. On an unadjusted basis it increased 3%. It was the second consecutive increase, the MBA said.

“The increase in mortgage applications last week was driven by a strong gain in application activity for conventional and government purchase loans, even as mortgage rates rose to their highest level – 5.53% – since 2009. Despite a slow start to this year’s spring homebuying season, prospective buyers are showing some resiliency to higher rates. Purchase activity has now increased for two straight weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “More borrowers continue to utilize ARMs to combat higher rates. The share of ARMs increased to 11% of overall loans and to 19% by dollar volume.”

According to the survey, the refinance index decreased 2% from the previous week and was 72% lower than the same week one year ago. The seasonally adjusted purchase index increased 5% from one week earlier. The unadjusted purchase index increased 5% compared with the previous week and was 8% lower than the same week one year ago.

The refinance share of mortgage activity decreased to 32.4% of total applications from 33.9% the previous week and the  adjustable-rate mortgage (ARM) share of activity increased to 10.8% of total applications.

“The rapid rise in mortgages rates continues to hit the refinance market, with activity 70% below a year ago,” Kan said. “Most homeowners refinanced to lower rates in the past two years.”

Other highlights of the survey, which covers 75% of  U.S. retail residential mortgage applications included:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.53% from 5.36%, with points increasing to 0.73 from 0.63 (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 5.08% from 4.92%, with points decreasing to 0.42 from 0.43 (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 4.79% to 4.68%, with points increasing to 0.80 from 0.76 (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 4.47% from 4.25%, with points decreasing to 0.73 from 0.78 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

 

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