MBA Weekly Applications Survey Mar. 30, 2022: Refis Plummet as Rates Jump to 3-Year High

Mortgage rates reached their highest level in three years last week, sending refinance applications and overall applications plunging, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending March 25. 

The Market Composite Index fell by 6.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 6 percent from the previous week. 

Refinances in particular suffered. The unadjusted Refinance Index fell by 15 percent from the previous week and was 60 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 40.6 percent of total applications from 44.8 percent the previous week.

Only purchase applications rose. MBA said the seasonally adjusted Purchase Index increased by 1 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent from the previous week but was 10 percent lower than the same week one year ago.

The FHA share of total applications increased to 9.3 percent from 8.8 percent the week prior. The VA share of total applications decreased to 9.5 percent from 9.8 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve,” said MBA Chief Economist Mike Fratantoni. “Not surprisingly, refinance application volume declined further, as fewer borrowers have an incentive to apply at rates that are significantly higher than a year ago. Refinance application volume is now 60 percent below last year’s levels, in line with MBA’s forecast for 2022.

Fratantoni noted even with the ongoing climb in rates, purchase application volumes were little changed last week. This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market,” he said. “Given these hurdles, it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.80 percent from 4.50 percent, with points decreasing to 0.56 from 0.59 (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 4.40 percent from 4.11 percent, with points decreasing to 0.44 from 0.51 (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 4.66 percent from 4.40 percent, with points decreasing to 0.71 from 0.73 (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 4.01 percent from 3.76 percent, with points unchanged at 0.55 (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 3.70 percent from 3.39 percent, with points unchanged at 0.54 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 6.6 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.