MBA Weekly Applications Survey Feb. 9, 2022: Rising Rates Put Damper on Refis

Mortgage interest rates continued to rise last week, snagging momentum for homeowners eager to refinance before rates go up further, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending February 4. 

The Market Composite Index decreased by 8.1 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 7 percent from the previous week and was 52 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 56.2 percent of total applications from 57.3 percent the previous week.

The seasonally adjusted Purchase Index decreased by 10 percent from one week earlier. The unadjusted Purchase Index decreased by 3 percent from the previous week and was 12 percent lower than the same week one year ago.

The FHA share of total applications increased to 8.0 percent from 7.7 percent the week prior. The VA share of total applications increased to 10.0 percent from 9.1 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

“With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity slowed after the previous week’s gain. Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10 percent. The average loan size again hit another record high at $446,000. Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.83 percent from 3.78 percent, with points decreasing to 0.40 from 0.41 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

“Mortgage rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies,” Kan said.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 3.62 percent from 3.59 percent, with points increasing to 0.35 from 0.31 (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 3.93 percent from 3.86 percent, with points decreasing to 0.54 from 0.55 (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 3.16 percent from 3.01 percent, with points increasing to 0.47 from 0.41 (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 3.13 percent from 3.09 percent, with points unchanged at 0.35 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity remained unchanged at 4.5 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.