MBA Weekly Applications Survey Jan. 5, 2022: Mixed Results over Holidays

Mortgage applications showed life ahead of the holidays but faded strongly during the holiday week, the Mortgage Bankers Association reported in its Weekly Mortgage Applications Survey for the weeks ending Dec 24 and Dec. 31.

The results include adjustments to account for the holidays.  

The Market Composite Index decreased by 2.7 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased by 32 percent from two weeks ago. 

The holiday adjusted Refinance Index decreased by 2 percent from two weeks ago and was 40 percent lower from year ago. The refinance share of mortgage activity increased to 65.4 percent of total applications from 63.9 percent the previous week.

The seasonally adjusted Purchase Index decreased by 4 percent from two weeks earlier. The unadjusted Purchase Index decreased by 32 percent from two weeks ago and was 12 percent lower than the same week one year ago.

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The FHA share of total applications increased to 9.2 percent from 8.5 percent the week prior. The VA share of total applications decreased to 11.3 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Mortgage rates continued to creep higher over the past two weeks, as markets maintained an optimistic view of the economy,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021 – when mortgage rates were around 40 basis points lower. The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021. Even though average loan sizes were lower, home price appreciation remains at very high levels.”

Kan noted despite supply and affordability challenges, 2021 was a record year for purchase originations. “MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.33 percent from 3.31 percent—the highest rate since last April—with points increasing to 0.48 from 0.38 (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 $548,250) decreased to 3.31 percent from 3.35 percent, with points increasing to 0.38 from 0.34 (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 increased to 3.40 percent from 3.39 percent, with points increasing to 0.42 from 0.37 (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 remained unchanged at 2.60 percent, with points increasing to 0.31 from 0.29 (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 2.45 percent from 2.74 percent, with points increasing to 0.33 from 0.22 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 3.3 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.