MBA Weekly Survey Aug. 24, 2022: Rates Jump; Activity at ‘Multi-Decade Low’

Mortgage applications fell for the fourth straight week, remaining at their lowest level in 22 years as interest rates jumped to its highest level since July, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending August 26. 

The Market Composite Index fell by 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 5 percent from the previous week. 

The unadjusted Refinance Index decreased by 8 percent from the previous week and was 83 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 30.3 percent of total applications from 31.1 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 4 percent from the previous week and was 23 percent lower than the same week one year ago.

The FHA share of total applications increased to 13.0 percent from 12.5 percent the week prior. The VA share of total applications decreased to 11.1 percent from 11.6 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

“Mortgage rates have been volatile over the past month, bouncing between 5.4 percent and 5.8 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “In another sign that market volatility has picked up, the average rate on a jumbo loan was 5.32 percent, 48 basis points lower than for a conforming loan.

This spread reached a high of over 50 basis points in July – and had narrowed – before now widening again.”

“Application volume dropped and remained at a multi-decade low last week, led by an 8 percent decline in refinance applications, which now make up only 30 percent of all applications,” Kan added. “Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due to higher rates and a weaker economic outlook. However, rising inventories and slower home-price growth could potentially bring some buyers back into the market later this year.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.80 percent from 5.65 percent, with points increasing to 0.71 from 0.68 (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 5.32 percent from 5.28 percent, with points decreasing to 0.48 from 0.58 (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 5.57 percent from 5.43 percent, with points decreasing to 1.09 from 1.10 (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 5.10 percent from 5.01 percent, with points decreasing to 0.82 from 0.84 (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 4.78 percent from 4.81 percent, with points decreasing to 0.61 from 0.74 (including origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The ARM share of activity increased to 8.5 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.