After an eight-week downward trend, mortgage applications increased 2.5% from one week earlier, according to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 29, 2022.
Key findings:
- The Market Composite Index increased 2.5% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index increased 3% compared with the previous week.
- The Refinance Index increased 0.2% from the previous week and was 71% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 4% from one week earlier.
- The unadjusted Purchase Index increased 5% compared with the previous week and was 11% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 33.9% of total applications from 35.0% the previous week.
- The adjustable-rate mortgage (ARM) share of activity remained unchanged at 9.3% of total applications.
- The FHA share of total applications increased to 11.1% from 10.6% the week prior.
- The VA share of total applications increased to 10.3% from 10.2% the week prior.
- The USDA share of total applications decreased to 0.4% from 0.5% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.36% from 5.37%, with points decreasing to 0.63 from 0.67 (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) increased to 4.92% from 4.89%, with points decreasing to 0.43 from 0.47 (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 decreased to 5.27% from 5.29%, with points decreasing to 0.85 from 0.88 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.68%, with points decreasing to 0.76 from 0.80 (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 4.25% from 4.2%, with points increasing to 0.78 from 0.74 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The takeaway:
“Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “The 30-year fixed rate was 5.36 percent, up over two percentage points from a year ago. The 127-basis-point jump in rates over the past two months has triggered a 49 percent drop in refinance activity. Purchase applications increased for conventional, FHA, and VA loans and were up 4 percent overall. This is potentially a good sign for the spring home buying season, which has seen a slow start thus far. The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments. The ARM share remained unchanged at around 9 percent, which is well below the 30 percent mark observed in the mid-2000s.”
