MBA Weekly Survey Oct. 5, 2022: Applications Fall to 25-Year Low
Mortgage applications took a huge hit last week, falling to their lowest level in 25 years as interest rates rose to their highest level since 2006, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending September 30.
The Market Composite Index fell by 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 14 percent from the previous week.
The unadjusted Refinance Index decreased by 18 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 29.0 percent of total applications from 30.2 percent the previous week.
The seasonally adjusted Purchase Index decreased by 13 percent from one week earlier. The unadjusted Purchase Index decreased by 13 percent from the previous week and was 37 percent lower than the same week one year ago.
The FHA share of total applications increased to 13.2 percent from 12.5 percent the week prior. The VA share of total applications remained unchanged at 10.7 percent from the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.
“Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006. The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace.”
Additionally, Kan noted, spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications. “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations,” he said. “Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.75 percent from 6.52 percent, with points decreasing to 0.95 from 1.15 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 6.14 percent from 6.01 percent, with points increasing to 0.79 from 0.70 (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 6.60 percent from 6.17 percent, with points increasing to 1.51 from 1.31 (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 5.96 percent from 5.70 percent, with points decreasing to 1.08 from 1.33 (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 5.36 percent from 5.30 percent, with points decreasing to 1.02 from 1.28 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity increased to 11.8 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.
