Mortgage applications decreased 1.3% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 8, 2022.
Key findings:
- The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 1% compared with the previous week.
- The Refinance Index decreased 5% from the previous week and was 62% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 1% from one week earlier.
- The unadjusted Purchase Index increased 2% compared with the previous week and was 6% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 37.1% of total applications from 38.8% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 7.4% of total applications.
- Shares of total applications:
- The FHA share increased to 9.5% from 9.2% the week prior.
- The VA share increased to 9.9% from 9.8% the week prior.
- The USDA share remained unchanged at 0.5% from the week prior.
Average contract interest rate increases:
- 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.13% from 4.90%, with points increasing to 0.63 from 0.53 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
- 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 4.68% from 4.5%, with points increasing to 0.37 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- 30-year fixed-rate mortgages backed by the FHA increased to 4.95% from 4.90%, with points increasing to 0.75 from 0.68 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- 15-year fixed-rate mortgages increased to 4.34% from 4.11%, with points increasing to 0.65 from 0.53 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- 5/1 ARMs increased to 4.06% from 3.82%, with points increasing to 0.68 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The takeaway:
“Mortgage rates across all loan types continued to move higher, with the 30-year fixed rate exceeding the 5-percent mark at 5.13%—the highest since November 2018. Refinance activity as a result declined to the slowest weekly pace since 2019,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Higher rates are increasing borrower interest in ARMs. Their share of applications last week was at 7.4%, which was the highest share since June 2019. In a promising sign of strong purchase demand amidst affordability challenges, both conventional and government purchase applications increased.”
Given the faster than expected increase in mortgage rates, and the likelihood of more aggressive actions from the Federal Reserve to curb inflation, MBA’s April 2022 forecast now calls for mortgage originations to total $2.58 trillion in 2022—a 35.5% decline from 2021. Purchase originations are still forecasted to reach a record $1.72 trillion this year—a 4% increase from 2021. Refinance originations are now expected to fall 64% to $841 billion.
“Mortgage rates have spiked more than 1.5 percentage points thus far in 2022. This rapid increase in rates, caused by a much more rapid pace of rate hikes and balance sheet reduction from the Federal Reserve, is in response to the booming job market and inflation being at a 40-year high,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “The jump in mortgage rates will slow the housing market and further reduce refinance demand the rest of this year. Higher home prices and rates as well as ongoing supply constraints are now expected to lead to an annual decline in existing home sales. However, MBA continues to expect purchase originations to reach a new record in 2022. Even though existing sales volume will be slightly lower than last year, the continued growth in new home sales and the swift rise in home prices should deliver a smaller, but solid, 4 percent annual growth in purchase origination volume.” Added Fratantoni, “Total origination volume is now expected to be at $2.58 trillion this year—down from roughly $4 trillion in 2021.”
