Mortgage applications decreased again this week, down 14.2% from a decrease of 3.7% the week earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending September 30, 2022.
Key findings this week:
- The Market Composite Index, a measure of mortgage loan application volume, decreased 14.2% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 14% compared with the previous week.
- The Refinance Index decreased 18% from the previous week and was 86% lower than the same week one year ago.
- The seasonally adjusted Purchase Index decreased 13% from one week earlier. The unadjusted Purchase Index decreased 13% compared with the previous week and was 37% lower than the same week one year ago.
The refinance share of mortgage activity decreased to 29.0% of total applications from 30.2% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 11.8% of total applications.
The FHA share of total applications increased to 13.2% from 12.5% the week prior. The VA share of total applications remained unchanged at 10.7% from the week prior. The USDA share of total applications remained unchanged at 0.6% from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75% from 6.52%, with points decreasing to 0.95 from 1.15 (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 6.14% from 6.01%, with points increasing to 0.79 from 0.70 (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 6.60% from 6.17%, with points increasing to 1.51 from 1.31 (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 5.96% from 5.70%, with points decreasing to 1.08 from 1.33 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 5.36% from 5.30%, with points decreasing to 1.02 from 1.28 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The takeaway:
“Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75% last week—the highest rate since 2006,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37% behind last year’s pace. Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12% of applications.”
Added Kan, “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31%, compared to 14% overall, on a non-seasonally adjusted basis.”
