Following a strong start to February, mortgage applications are trending back down. The Mortgage Bankers Association’s (MBA) Weekly Mortgage Application Survey showed a 5.4 decrease for the week ending February 11, versus the prior week.
Key findings:
- While the 5.4% decrease is seasonally adjusted, the unadjusted index only decreased by 3% versus the previous week.
- The Refinance Index decreased 9% versus the same period, which is 54% lower than the same week a year ago.
- The seasonally adjusted Purchase Index decreased 1% versus the previous week.
- Conversely, the unadjusted Purchase Index increased by 5%, but was 7% lower than the same week last year.
- The refinance share of mortgage activity decreased to 52.8% of total applications from 56.2% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.0% of total applications.
- The FHA share of total applications increased to 8.3% from 8.0% the week prior.
- The VA share of total applications decreased to 9.3% from 10.0% the week prior.
- The USDA share of total applications remained unchanged at 0.4% from the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.05% from 3.83%, with points increasing to 0.45 from 0.40 (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 3.81% from 3.62%, with points increasing to 0.39 from 0.35 (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 increased to 4.01% from 3.93%, with points increasing to 0.59 from 0.54 (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 3.37% from 3.16%, with points increasing to 0.50 from 0.47 (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 3.36% from 3.13%, with points increasing to 0.48 from 0.35 (including the origination fee) for 80%LTV loans. The effective rate increased from last week.
The takeaway:
“Mortgage rates increased across the board last week following the recent rise in Treasury yields, which have moved higher due to unrelenting inflationary pressures and increased market expectations of more aggressive policy moves by the Federal Reserve,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The 30-year fixed rate saw the largest single-week increase since March 2020 and was above the 4 percent mark for the first time since 2019. Consistent with this period of higher mortgage rates, refinance applications fell 9 percent last week and stood at around half of last year’s pace. The refinance share of applications was also at its lowest level since July 2019.”
Added Kan, “Purchase applications saw a modest decline over the week, with government purchase applications accounting for most of the decrease. Prospective buyers still face elevated sales prices in addition to higher mortgage rates. The heavier mix of conventional applications again contributed to another record average loan size at $453,000.”
