MBA Weekly Survey Aug. 3, 2022: Sharp Drop in Rates Drives Up Applications Activity

A 31-basis-point drop in mortgage interest rates brought home buyers—and refinancers—out of the woodwork last week, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending July 29. 

The Market Composite Index increased by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 1 percent from the previous week. 

The unadjusted Refinance Index increased by 2 percent from the previous week but was 82 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.8 percent of total applications from 30.7 percent the previous week.

The seasonally adjusted Purchase Index increased by 1 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent from the previous week but was 16 percent lower than the same week one year ago.

The FHA share of total applications decreased to 11.9 percent from 12.1 percent the week prior. The VA share of total applications increased to 10.8 percent from 10.6 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

“Mortgage rates declined last week following another announcement of tighter monetary policy from the Federal Reserve, with the likelihood of more rate hikes to come,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Treasury yields dropped as a result, as investors continue to expect a weaker macroeconomic environment in the coming months.”

The 30-year fixed rate saw the largest weekly decline since 2020, falling 31 basis points to 5.43 percent. Kan noted the drop in rates led to increases in both refinance and purchase applications, but compared to a year ago, activity remained depressed. “Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.43 percent from 5.74 percent, with points increasing to 0.65 from 0.61 (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) decreased to 5.06 percent from 5.32 percent, with points decreasing to 0.36 from 0.43 (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 decreased to 5.39 percent from 5.54 percent, with points increasing to 1.03 from 0.85 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.74 percent from 4.95 percent, with points decreasing to 0.65 from 0.67 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 4.55 percent from 4.67 percent, with points decreasing to 0.69 from 0.76 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 8.4 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.