MBA Weekly Applications Survey April 20, 2022: Rising Mortgage Rates Push Down Applications

MBA NewsLink Staff

The highest mortgage rates in more than a decade pushed mortgage application activity down, the the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending April 15. 

The Market Composite Index decreased by 5.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent from the previous week. 

The unadjusted Refinance Index decreased by 8 percent from the previous week—the sixth consecutive weekly decrease—and was 68 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 35.7 percent of total applications from 37.1 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 14 percent lower than the same week one year ago.

The FHA share of total applications increased to 9.9 percent from 9.5 percent the week prior. The VA share of total applications increased to 10.1 percent from 9.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent.

“Ongoing concerns about rapid inflation and tighter U.S. monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 30-year rate has increased 70 basis points over the past month and is 2 full percentage points higher than a year ago. The recent surge in mortgage rates has shut most borrowers out of rate/term refinances.”

The purchase market didn’t fare much better, Kan said. “In a housing market facing affordability challenges and low inventory, higher rates are causing a pullback or delay in home purchase demand as well,” he said. “Home purchase activity has been volatile in recent weeks and has yet to see the typical pick up for this time of the year.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.20 percent from 5.13 percent, with points increasing to 0.66 from 0.63 (including the origination fee) for 80 percent 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 4.76 percent from 4.68 percent, with points increasing to 0.46 from 0.37 (including the 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 the FHA increased to 5.11 percent from 4.95 percent, with points increasing to 0.90 from 0.75 (including the 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 4.44 percent from 4.34 percent, with points increasing to 0.77 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to 4.09 percent from 4.06 percent, with points decreasing to 0.56 from 0.68 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The adjustable-rate mortgage (ARM) share of activity increased to 8.5 percent of total applications, to its highest level since 2019. “As ARM loans typically have lower rates than fixed rate mortgages, and as this spread has widened, ARM  loans have become more attractive to borrowers already facing home purchase loan amounts close to record highs,” Kan said.

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.