MBA Weekly Applications Survey May 18, 2022: Higher Rates Discourage Borrowers
Mortgage applications fell for the first time in three weeks as interest rates hovered near 13-year highs, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 13.
The Market Composite Index fell by 11.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 11 percent from the previous week.
The unadjusted Refinance Index decreased by 10 percent from the previous week and was 76 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 33.0 percent of total applications from 32.4 percent the previous week.
The seasonally adjusted Purchase Index decreased by 12 percent from one week earlier. The unadjusted Purchase Index decreased by 12 percent from the previous week and was 15 percent lower than the same week one year ago.
The FHA share of total applications increased to 11.1 percent from 10.5 percent the week prior. The VA share of total applications remained unchanged at 10.5 percent. The USDA share of total applications remained unchanged at 0.5 percent.
“Mortgage rates – despite declining last week – remained over two percentage points higher than a year ago and close to the highest levels since 2009,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “For borrowers looking to refinance, the current level of rates continues to be a significant disincentive.”
Kan noted purchase applications fell 12 percent last week, as prospective homebuyers have been put off by the higher rates and worsening affordability conditions. “Furthermore, general uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search,” he said. These results were consistent with MBA’s May forecast released earlier this week, which now calls for fewer home sales and mortgage originations in 2022 compared to a year ago.”
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.49 percent from 5.53 percent, with points increasing to 0.74 from 0.73 (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 5.03 percent from 5.08 percent, with points increasing to 0.61 from 0.42 (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 decreased to 5.32 percent from 5.37 percent, with points decreasing to 0.71 from 0.87 (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 4.73 percent from 4.79 percent, with points increasing to 0.82 from 0.80 (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 4.42 percent from 4.47 percent, with points unchanged at 0.73 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity decreased to 10.3 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.
