Despite a slight drop in mortgage rates, mortgage applications continued their decrease for the sixth straight week.
According to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending October 28, 2022, mortgage applications decreased 0.5% from a 1.7% decrease one week earlier. This week’s results include revised data to reflect an update to last week’s survey results.
The latest:
- The Market Composite Index, a measure of mortgage loan application volume, decreased 0.5% 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 increased 0.2% from the previous week and was 85% 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 41% lower than the same week one year ago.
- The refinance share of mortgage activity increased to 28.6% of total applications from 28.2% the previous week.
- The adjustable-rate mortgage (ARM) share of activity decreased to 11.8% of total applications.
- The FHA share of total applications decreased to 13.5% from 13.9% the week prior.
- The VA share of total applications decreased to 10.3% from 10.7% the week prior.
- The USDA share of total applications remained unchanged at 0.5% from the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 7.06% from 7.16%, with points decreasing to 0.73 from0.88 (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 6.55% from 6.53%, with points increasing to 0.7 from 0.68 (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 decreased to 6.70% from 6.79%, with points decreasing to 1.18 from 1.59 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.37% from 6.39%, with points decreasing to 1.05 from 1.52 (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 5.79% from 5.86%, with points increasing to 0.9 from 0.88 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The takeaway:
“Mortgage applications declined for the sixth consecutive week despite a slight drop in rates. The 30-year fixed rate decreased for the first time in over two months to 7.06%, but remained close to its highest since 2002,” said Joel Kan, MBA’s vice president and deputy chief economist. “Apart from the ARM loan rate, rates for all other loan types were more than three%age points higher than they were a year ago. These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales.”
Added Kan: “With most homeowners locked into significantly lower rates, refinance applications continued to run more than 80% below last year’s pace, while the refinance share of applications was 28.6%–the fifth straight week below 30%.”
