MBA Weekly Applications Survey May 11, 2022: Winning Streak at 2

Mortgage applications posted rare back-to-back weekly increases despite interest rates hitting a 13-year high, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 6.

The Market Composite Index rose by 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 3 percent from the previous week. 

The unadjusted Refinance Index fell, however, decreasing by 2 percent from the previous week and by 72 percent from the same week one year ago. The refinance share of mortgage activity decreased to 32.4 percent of total applications from 33.9 percent the previous week.

The seasonally adjusted Purchase Index increased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 5 percent from the previous week but was 8 percent lower than the same week one year ago.

The FHA share of total applications decreased to 10.5 percent from 11.1 percent the week prior. The VA share of total applications increased to 10.5 percent from 10.3 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

“The increase in mortgage applications last week was driven by a strong gain in application activity for conventional and government purchase loans, even as mortgage rates rose to their highest level – 5.53 percent – since 2009,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite a slow start to this year’s spring home buying season, prospective buyers are showing some resiliency to higher rates. Purchase activity has now increased for two straight weeks.

Kan noted more borrowers continue to use adjustable-rate mortgages to combat higher rates; MBA reported the share of ARMs increased to 11 percent of overall loans and to 19 percent by dollar volume.

“The rapid rise in mortgages rates continues to hit the refinance market, with activity 70 percent below a year ago,” Kan said. “Most homeowners refinanced to lower rates in the past two years.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.53 percent from 5.36 percent, with points increasing to 0.73 from 0.63 (including origination fee) for 80 percent loan-to-value ratio 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 5.08 percent from 4.92 percent, with points decreasing to 0.42 from 0.43 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 5.37 percent from 5.27 percent, with points increasing to 0.87 from 0.85 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.79 percent from 4.68 percent, with points increasing to 0.80 from 0.76 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 4.47 percent from 4.25 percent, with points decreasing to 0.73 from 0.78 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 10.8 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.