MBA Weekly Applications Survey April 6, 2022: As Rates Push 5%, Applications Drop Again

Mortgage interest rates pushed ever closer to 5 percent, putting a damper on mortgage applications for the third straight week, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending April 1. 

The Market Composite Index fell by 6.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 6 percent from the previous week. 

The unadjusted Refinance Index decreased by 10 percent from the previous week and was 62 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 38.8 percent of total applications from 40.6 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 3 percent from the previous week and was 9 percent lower than the same week one year ago.

The FHA share of total applications decreased to 9.2 percent from 9.3 percent the week prior. The VA share of total applications increased to 9.8 percent from 9.5 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

“Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019.”

Despite this, Kan noted the hot job market and rapid wage growth continue to support housing demand even amid the surge in rates and swift home-price appreciation. “However, insufficient for-sale inventory is restraining purchase activity,” he said. “Additionally, the elevated average purchase loan size, and steeper 8 percent drop in FHA purchase applications, are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.90 percent from 4.80 percent, with points decreasing to 0.53 from 0.56 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week. Kan said the 30-year fixed rate is now more than 1.5 percentage points higher than a year ago.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 4.51 percent from 4.40 percent, with points decreasing to 0.34 from 0.44 (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 4.90 percent from 4.66 percent, with points decreasing to 0.68 from 0.71 (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 4.11 percent from 4.01 percent, with points decreasing to 0.53 from 0.55 (including 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 3.82 percent from 3.70 percent, with points decreasing to 0.46 from 0.54 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 6.8 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.