After two weeks of increases, mortgage applications changed course this week, decreasing 2.3% from one week earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending August 12, 2022.
Key findings:
- The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 3% compared with the previous week.
- The Refinance Index decreased 5% from the previous week and was 82% lower than the same week one year ago.
- The seasonally adjusted Purchase Index decreased 1% from one week earlier.
- The unadjusted Purchase Index decreased 2% compared with the previous week and was 18% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 31.2% of total applications from 32.0% the previous week.
- The adjustable-rate mortgage (ARM) share of activity decreased to 7.0% of total applications.
- The FHA share of total applications decreased to 12.0% from 12.1% the week prior.
- The VA share of total applications increased to 11.2% from 10.9% the week prior.
- The USDA share of total applications remained unchanged at 0.6% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.45% from 5.47%, with points decreasing to 0.57 from 0.80 (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 5.14% from 5.09%, with points decreasing to 0.33 from 0.59 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 5.38% from 5.35%, with points decreasing to 1.01 from 1.02 (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 4.87% from 4.74%, with points increasing to 0.64 from 0.62 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 4.43% from 4.60%, with points decreasing to 0.43 from 0.63 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The takeaway:
“Mortgage application activity was lower last week, with overall applications declining over two% to their lowest level since 2000. Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “However, if home price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year. The 30-year fixed rate stayed more than two percentage points higher than a year ago at 5.45% but was down over 50 basis points from the June 2020 high of 5.98%, providing some relief for buyers in the market. The refinance index, however, fell five% to its lowest level since November 2000, driven by a 6% drop in conventional refinance applications.”
