MBA Weekly Applications Survey Jan. 26, 2022: Mortgage Applications Decrease

Mortgage applications decreased 7.1 percent from one week earlier, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending January 21.

The Market Composite Index, a measure of mortgage loan application volume, decreased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 6 percent compared with the previous week. The Refinance Index decreased 13 percent from the previous week and was 53 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 11 percent lower than the same week one year ago.

“All mortgage rates in MBA’s survey continued to climb, with the 30-year fixed rate rising for the fifth consecutive week to its highest level since March 2020,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. He noted the 30-year fixed rate is now 77 basis points
higher than a year ago. “Unsurprisingly, borrower demand for refinances subsided, with applications falling for the fourth straight week. After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance. Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them.”

Kan said the decline in purchase activity was led by a 5 percent drop in government applications, compared to a less than one percent decline in conventional applications. “The relative weakness in government purchase activity continues to contribute to higher loan sizes,” he said. The average purchase loan size was $433,500, eclipsing the previous record of $418,500 set two weeks ago.

The refinance share of mortgage activity decreased to 55.8 percent of total applications from 60.3 percent the previous week. The adjustable-rate mortgage share of activity increased to 4.4 percent of total applications.

The FHA share of total applications decreased to 8.6 percent from 9.3 percent the week prior. The VA share of total applications decreased to 9.9 percent from 10.0 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.72 percent from 3.64 percent, with points decreasing to 0.43 from 0.45 (including the 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 3.56 percent from 3.54 percent, with points decreasing to 0.38 from 0.47 (including the 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 the FHA increased to 3.69 percent from 3.64 percent, with points increasing to 0.61 from 0.44 (including the 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 3.00 percent from 2.95 percent, with points decreasing to 0.39 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.18 percent from 3.04 percent, with points increasing to 0.33 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

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.