The closely watched weekly data released by the Mortgage Bankers Association (MBA) on mortgage applications reported a precipitous drop after two weeks of gains, as spiraling rates, broader economic uncertainty and continued low inventory seem to be putting a longer-term damper on both refinancing and new mortgages.
According to the latest Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey this week, applications are down 11% overall from last week after posting consecutives gains in the 2% range. The drop included both purchase applications (down 12%) and refinance (down 10%), according to the report.
“Mortgage applications decreased for the first time in three weeks, as mortgage rates—despite declining last week—remained over two percentage points higher than a year ago and close to the highest levels since 2009,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “For borrowers looking to refinance, the current level of rates continues to be a significant disincentive.”
The average 30-year fixed actually fell fractionally, from 5.53% to 5.49%, but the lending industry has seemingly already begun hunkering down for a tough year.
“General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search,” Kan added.
MBA previously criticized how the Federal Reserve has proceeded with its mandate to cool off inflation and raise interest rates, while also saying mortgage rates should not peak much higher than they are now, as markets have to some degree already priced in future rate hikes. The Association has continued to predict a significant pullback in mortgages this year compared to 2021, mostly driven by a decrease in refinances.
Additional Findings:
- The FHA share of total applications increased to 11.1% from 10.5% last week. The VA share of total applications remained unchanged at 10.5%. The USDA share of total applications remained unchanged at 0.5%.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.73% from 4.7%. The average contract interest rate for 5/1 ARMs decreased to 4.42% from 4.47%.
- Refinances continue to lag far behind this same period a year ago, down 76%.
