MBA Weekly Applications Survey Jan. 12, 2022: Rising Rates Push Borrower Activity

Mortgage interest rates reached their highest level since the coronavirus—and perhaps spurred mortgage applicants to jump into action, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending Jan. 7.

The previous week’s results included an adjustment for the holidays.

The Market Composite Index increased by 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 46 percent from the previous week. 

The unadjusted Refinance Index decreased by 0.1 percent from the previous week and was 50 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 64.1 percent of total applications from 65.4 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 51 percent from the previous week and was 17 percent lower than the same week one year ago.

The FHA share of total applications increased to 9.9 percent from 9.2 percent the week prior. The VA share of total applications increased to 11.4 percent from 11.3 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Rates at these levels are quickly closing the door on refinance opportunities for many borrowers. Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020.”

Kan said the housing market started 2022 on a strong note. “Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9 percent, and VA applications increasing more than 5 percent,” he said. “MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand. However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.52 percent from 3.33 percent, with points decreasing to 0.45 from 0.48 (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 3.42 percent from 3.31 percent, with points decreasing to 0.36 from 0.38 (including the 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 3.50 percent from 3.40 percent, with points increasing to 0.45 from 0.42 (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 2.73 percent from 2.60 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 5/1 adjustable-rate mortgages increased to 3.03 percent from 2.45 percent, with points decreasing to 0.20 from 0.33 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 3.1 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.