MBA Weekly Survey June 22, 2022: Applications on a Winning Streak Despite Nearly 6% Interest Rates

After falling for more than a month, mortgage applications rose for the second week in a row, even as interest rates nearly reached 6 percent—the highest level since 2008, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending June 17. 

The overall Market Composite Index increased by 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 3 percent from the previous week. 

Purchase applications led the weekly increase. The seasonally adjusted Purchase Index increased by 8 percent from one week earlier. The unadjusted Purchase Index increased by 6 percent from the previous week but was 10 percent lower than the same week one year ago.

Refinances continued to drop. The unadjusted Refinance Index decreased by 3 percent from the previous week and was 77 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 29.7 percent of total applications from 31.7 percent the previous week.

Meanwhile, the adjustable-rate mortgage share of activity increased to 10.6 percent of total applications.

The FHA share of total applications increased to 12.0 percent from 11.8 percent the week prior. The VA share of total applications decreased to 10.7 percent from 11.7 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98 percent – the highest since November 2008 and the largest single-week increase since 2009,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “All other loan types also increased by at least 20 basis points, influenced by the Federal Reserve’s 75-basis-point rate hike and commentary that more are coming to slow inflation. Mortgage rates are now almost double what they were a year ago, leading to a 77 percent drop in refinance volume over the past 12 months.”

Kan noted inventory shortages and higher mortgage rates are dampening demand. “The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price-growth is moderating,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.98 percent from 5.65 percent, with points increasing to 0.77 from 0.71 (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 5.49 percent from 5.25 percent, with points decreasing to 0.45 from 0.54 (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 5.62 percent from 5.36 percent, with points increasing to 1.18 from 1.00 (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 5.05 percent from 4.79 percent, with points increasing to 0.86 from 0.80 (including 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 4.78 percent from 4.57 percent, with points increasing to 0.84 from 0.80 (including 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.