Mortgage applications continue the downward trend for the eighth-consecutive week, as rates last week reached their highest since 2009, according to the data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Application Survey for the week ending on April 22nd.
Key findings:
- The Market Composite Index decreased 8,3% on a seasonally adjusted basis from one week earlier.
- The MCI decreased 7% on an unadjusted basis.
- The Refinance Index decreased 9% from the previous week, and decreased 71% year-over-year.
- The seasonally adjusted Purchase Index decreased 8% from last week.
- The unadjusted Purchase Index decreased 7% since a week ago, and dropped 17% year-over-year.
- The refinance share of mortgage activity decreased to 35% of total applications from the 35.7% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 9.3% of total applications
- The share of total applications for:
- The FHA increased to 10.6% from 9.9% the week prior.
- The VA increased to 10.2% from 10.1% the week prior.
- The USDA remained unchanged at 0.5% from the week prior.
Average contract interest rate:
- 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.37% from 5.20%, with points increasing to 0.67 from 0.66 for 80% LTV loans. The effective rate increased from last week.
- 30-year fixed-rate mortgages with jubo loan balances (greater than $647,200) increased to 4.89% from 4.76 percent, with points increasing to 0.47 from 0.46 (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 5.29% from 5.11%, with points decreasing to 0.88 from 0.90 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- 15-Year fixed rate mortgages increased to 4.68% from 4.44%, with points increasing to 0.80 from 0.77 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- 5/1 ARMs increased to 4.28% from 4.09%, with points increasing to 0.74 from 0.56 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The takeaway:
“With mortgage rates increasing last week to the highest level since 2009, applications continued to decline. Overall application activity fell to the lowest level since 2018, with both purchase and refinance applications posting declines. Refinance applications were 70% below the same week a year ago, when the 30-year fixed rate was in the 3% range,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The drop in purchase applications was evident across all loan types. Prospective homebuyers have pulled back this spring, as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices. The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months.”
Added Kan, “In a period of high home-price growth and rapidly increasing mortgage rates, borrowers continued to mitigate higher monthly payments by applying for ARM loans. The ARM share of applications last week was over 9% by loan count and 17% based on dollar volume. At 9 percent, the ARM share was double what it was three months ago, which also coincides with the 1.5 percentage point increase in the 30-year fixed rate.”
