MBA Weekly Applications Survey Mar. 23, 2022: 30-Year Rates Soar; Applications Fall

MBA NewsLink Staff

Mortgage rates jumped last week; and mortgage applications fell, the Mortgage Bankers Association reported in its Weekly Mortgage Applications Survey for the week ending March 18. 

The Market Composite Index decreased by 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 8 percent from the previous week. 

The unadjusted Refinance Index decreased by 14 percent from the previous week and was 54 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 44.8 percent of total applications from 48.4 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent from the previous week and was 12 percent lower than the same week one year ago.

The FHA share of total applications increased to 8.8 percent from 8.7 percent the week prior. The VA share of total applications decreased to 9.8 percent from 10.5 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

“Rates on 30-year conforming mortgages jumped by 23 basis points last week, the largest weekly increase since March 2020,” said MBA Chief Economist Mike Fratantoni. “The jump in rates comes as markets moved to price in a much faster pace of rate hikes, as well as expectations of fewer MBS purchases from the Federal Reserve.”

Fratantoni noted with mortgage rates now at 4.5 percent, compared to rates at or below 3 percent not that long ago, it is no surprise that refinance volume has dropped by more than 50 percent from a year ago.

“MBA’s new March forecast expects mortgage rates to continue to trend higher through the course of 2022,” Fratantoni said. “Purchase application volume was down slightly for the week, with a larger drop in FHA and VA purchase volume, and a small decline in conventional purchase loans.”

Fratantoni said first-time homebuyers, who rely on these government programs, are increasingly challenged by both the rapid increase in home prices and higher mortgage rates. “Repeat homebuyers, who are more likely to use conventional loans, benefit from the gains in home equity realized on a sale which can be used to fuel their next purchase, even with rates moving higher,” 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 4.50 percent from 4.27 percent, with points increasing to 0.59 from 0.54 (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 4.11 percent from 4.02 percent, with points increasing to 0.51 from 0.37 (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 4.40 percent from 4.23 percent, with points increasing to 0.73 from 0.62 (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 3.76 percent from 3.55 percent, with points increasing to 0.55 from 0.46 (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 3.39 percent from 3.36 percent, with points increasing to 0.54 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 6.4 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.