MBA Weekly Survey Oct. 19, 2022: Mortgage Applications Tumble Again

Mortgage applications fell yet again last week, reaching their lowest level in 25 years, while mortgage interest rates hit their highest level since 1997, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending October 14. 

The Market Composite Index fell by 4.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index fell by 4 percent from the previous week. 

The unadjusted Refinance Index fell by 7 percent from the previous week and was 86 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 28.3 percent of total applications from 29.0 percent the previous week.

The seasonally adjusted Purchase Index fell by 4 percent from one week earlier. The unadjusted Purchase Index fell by 3 percent from the previous week and was 38 percent lower than the same week one year ago.

The FHA share of total applications increased to 13.6 percent from 13.5 percent the week prior. The VA share of total applications decreased to 10.7 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.

“The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Residential housing activity ranging from new housing starts to home sales have been on downward trends coinciding with the rise in rates. The current 30-year fixed rate is now well over three percentage points higher than a year ago, and both purchase and refinance applications were down 38 percent and 86 percent over the year, respectively.”

With rates at these high levels, Kan added, the ARM share rose to 12.8 percent of all applications, the highest share since March 2008. “ARM loans continue to remain a viable option for borrowers who are still trying to find ways to reduce their monthly payments,” 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 6.94 percent from 6.81 percent, with points decreasing to 0.95 from 0.97 (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 6.31 percent from 6.25 percent, with points increasing to 0.67 from 0.61 (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 6.63 percent from 6.61 percent, with points decreasing to 1.60 from 1.71 (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 6.09 percent from 6.12 percent, with points decreasing to 1.18 from 1.30 (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 increased to 5.65 percent from 5.56 percent, with points remaining at 0.90 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 12.8 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.