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Weekly Mortgage Applications Fell 13% At Year's End

David Krechevsky
Jan 04, 2023
mortgage application

MBA’s survey for the week ending Dec. 30 found applications, seasonally adjusted, fell 13.2% from two weeks earlier.

KEY TAKEAWAYS
  • Market Composite Index — a measure of mortgage loan application volume — fell 13.2% from two weeks earlier.
  • The holiday adjusted Refinance Index decreased 16.3% from two weeks prior.
  • The refinance share of mortgage activity increased to 30.3% of total applications.

After increasing for two straight weeks earlier in the month, mortgage applications dropped to close out 2022, the Mortgage Bankers Association (MBA) said Wednesday.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 30, the Market Composite Index — a measure of mortgage loan application volume — fell 13.2% from two weeks earlier. The results include adjustments to account for the holidays. On an unadjusted basis, the index decreased 39.4% from two weeks earlier. 

The holiday-adjusted Refinance Index decreased 16.3% from two weeks prior and was 87% lower than the same week last year. 

The seasonally adjusted Purchase Index fell 12.2% from two weeks earlier. The unadjusted Purchase Index dropped 38.5% from two weeks earlier and was 42% lower than the same week last year.

“The end of the year is typically a slower time for the housing market, and with mortgage rates still well above 6% and the threat of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest level since 1996,” said Joel Kan, MBA’s vice president and deputy chief economist. BankRate.com says the current average national 30-year fixed rate is 6.59%.

“Purchase applications have been impacted by slowing home sales in both the new and existing segments of the market,” Kan said. “Even as home-price growth slows in many parts of the country, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market.”

He added, “Refinance applications remain less than a third of the market and were 87% lower than a year ago as rates remained close to double what they were in 2021. Mortgage rates are lower than October 2022 highs, but would have to decline substantially to generate additional refinance activity.” 

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only, the MBA said.

The refinance share of mortgage activity increased to 30.3% of total applications from 28.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.3% of total applications.

The FHA share of total applications increased to 14% from 13.1% the previous week. The VA share of total applications increased to 13.4% from 12% a week earlier. The USDA share of total applications remained unchanged at 0.6%.

Key Highlights

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.58% from 6.42%, with points increasing to 0.73 from 0.65 (including the origination fee) for 80 percent 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) remained at 6.12%, with points increasing to 0.45 from 0.37 (including the origination fee) for 80 percent 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 6.45 percent from 6.41 percent, with points increasing to 1.24 from 1.13 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 6.06% from 5.97%, with points increasing to 0.70 from 0.57 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 5.61% from 5.45%, with points decreasing to 0.62 from 0.95 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. 

The 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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