MBA Weekly Survey June 1, 2022: Applications at 4-Year Low

Mortgage applications fell for the third straight week to their lowest level since 2018, despite interest rates falling for the fourth time in five weeks, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 27. 

The Market Composite Index decreased by 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent from the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 75 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.5 percent of total applications from 32.3 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 14 percent lower than the same week one year ago.

The FHA share of total applications decreased to 10.8 percent from 11.3 percent the week prior. The VA share of total applications decreased to 10.2 percent from 10.4 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

“Concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The purchase market continues to struggle with supply and affordability challenges. With the 30-year fixed rate at 5.33 percent, the refinance market continues to shrink, led by larger decreases last week for FHA and VA refinance applications. The refinance index was 75 percent below last year’s level, when rates were more than 200 basis points lower.”

Kan said purchase applications were 14 percent lower than last year, with more activity in the larger loan sizes. “Demand is high at the upper end of the market, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.33 percent from 5.46 percent, with points decreasing to 0.51 from 0.60 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 4.93 percent from 5.02 percent, with points unchanged at 0.41 (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 decreased to 5.20 percent from 5.36 percent, with points decreasing to 0.69 from 0.82 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.59 percent from 4.72 percent, with points decreasing to 0.63 from 0.70 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 4.46 percent from 4.49 percent, with points decreasing to 0.68 from 0.76 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 8.7 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.