Mortgage applications decreased again this week 3.7% from last week’s 1.2% drop, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending August 26, 2022.
- The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 5% compared with the previous week.
- The Refinance Index decreased 8% from the previous week and was 83% lower than the same week one year ago.
- The seasonally adjusted Purchase Index decreased 2% from one week earlier.
- The unadjusted Purchase Index decreased 4% compared with the previous week and was 23% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 30.3% of total applications from 31.1% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 8.5% of total applications.
- The FHA share of total applications increased to 13.0% from 12.5% the week prior.
- The VA share of total applications decreased to 11.1% from 11.6% the week prior.
- The USDA share of total applications decreased to 0.6% from 0.7% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.80% from 5.65%, with points increasing to 0.71 from 0.68 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200)increased to 5.32% from 5.28%, with points decreasing to 0.48 from 0.58 (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 increased to 5.57% from 5.43%, with points decreasing to 1.09 from 1.10 (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 5.10% from 5.01%, with points decreasing to 0.82 from 0.84 (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 4.78% from 4.81%, with points decreasing to 0.61 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The takeaway:
“The 30-year fixed mortgage rate increased for the second week in a row to 5.80%, reaching its highest level since mid-July. Mortgage rates and Treasury yields rose last week as Federal Reserve officials indicated that short-term rates would stay higher for longer. Mortgage rates have been volatile over the past month, bouncing between 5.4% and 5.8%,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “In another sign that market volatility has picked up, the average rate on a jumbo loan was 5.32%, 48 basis points lower than for a conforming loan. This spread reached a high of over 50 basis points in July—and had narrowed—before now widening again.”
Added Kan, “Application volume dropped and remained at a multi-decade low last week, led by an 8% decline in refinance applications, which now make up only 30% of all applications. Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due to higher rates and a weaker economic outlook. However, rising inventories and slower home-price growth could potentially bring some buyers back into the market later this year.”
