MBA Weekly Survey Aug. 17, 2022: Applications Drop to Lowest Level Since 2000

Mortgage applications fell to their lowest level in 22 years, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending August 12. 

The Market Composite Index fell by 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent from the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 82 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.2 percent of total applications from 32.0 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 18 percent lower than the same week one year ago.

The FHA share of total applications decreased to 12.0 percent from 12.1 percent the week prior. The VA share of total applications increased to 11.2 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent the week prior.

“Mortgage application activity was lower last week, with overall applications declining over two percent to their lowest level since 2000,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability and a gloomier outlook of the economy kept buyers on the sidelines.”

However, Kan noted should home price growth slows more significantly and mortgage rates move lower, purchase activity could improve later in the year. “The 30-year fixed rate stayed more than two percentage points higher than a year ago at 5.45 percent but was down over 50 basis points from the June 2020 high of 5.98 percent, providing some relief for buyers in the market,” he said. “The refinance index,however, fell five percent to its lowest level since November 2000, driven by a six percent drop in conventional refinance applications.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.45 percent from 5.47 percent, with points decreasing to 0.57 from 0.80 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 5.14 percent from 5.09 percent, with points decreasing to 0.33 from 0.59 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 5.38 percent from 5.35 percent, with points decreasing to 1.01 from 1.02 (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 4.87 percent from 4.74 percent, with points increasing to 0.64 from 0.62 (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 decreased to 4.43 percent from 4.60 percent, with points decreasing to 0.43 from 0.63 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 7.0 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.