MBA Weekly Survey Oct. 12, 2022: Rising Rates Drive Push Applications to Another 25-Year Low

Mortgage interest rates rose to their highest level since 2006, pushing mortgage application activity to their lowest level in 25 years, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending October 7. 

The Market Composite Index fell by 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 2 percent from the previous week. 

The unadjusted Refinance Index decreased by 2 percent from the previous week and was 86 percent lower than the same week one year ago. The refinance share of mortgage activity remained unchanged at 29.0 percent of total applications.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 39 percent lower than the same week one year ago.

The FHA share of total applications increased to 13.5 percent from 13.2 percent the week prior. The VA share of total applications increased to 10.9 percent from 10.7 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

“Mortgage rates moved higher once again during the first week of the fourth quarter of 2022, with the 30-year conforming rate reaching 6.81 percent, the highest level since 2006,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Mortgage rates increased across all product types in MBA’s survey, with the largest, a 20-basis-point increase, for 5-year ARM loans. The ARM share of applications remained quite high at 11.7 percent – just below last week’s level. Application volumes for both refinancing and home purchases declined and continue to fall further behind last year’s record levels.”

Fratantoni noted the news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. “However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” 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 6.81 percent from 6.75 percent, with points increasing to 0.97 from 0.95 (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 6.25 percent from 6.14 percent, with points decreasing to 0.61 from 0.79 (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 6.61 percent from 6.60 percent, with points increasing to 1.71 from 1.51 (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 6.12 percent from 5.96 percent, with points increasing to 1.30 from 1.08 (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 5.56 percent from 5.36 percent, with points decreasing to 0.9 from 1.02 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 11.7 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.