geckophotos / Getty Images/iStockphoto
Mortgage applications for the week ending February 18 declined to their lowest level since December 2019 as mortgage rates continued to push higher, according to new data from the Mortgage Bankers Association.
See: As Home Prices Reach 34-Year Record, Mortgage Rates Could Be Final Nail in Coffin for Some Homebuyers
Find: How Much House Does $200K Buy You in Every State?
The Market Composite Index, which measures mortgage loan application volume, declined 13.1% on a seasonally adjusted basis from one week earlier, the MBA said on Wednesday. On an unadjusted basis, the Index decreased 11% from the prior week. The drop in applications came as the 30-year fixed rate rose to 4.06% — almost a full percentage point higher than a year ago.
“Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022. Conventional refinances, in particular, saw a 17 percent decrease last week,” Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said in a press release. “Purchase applications, already constrained by elevated sales prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week. While the average loan size did not increase this week, it remained close to the survey’s record high.”
The news came after last week’s MBA report showing that mortgage applications for January 2022 declined 12.5% from the previous year but increased 10% on a month-over-month basis.
For the week ending February 18, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.06% from 4.05% the week before, with points increasing to 0.48 from 0.45 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate also increased from last week.
See: Why Now Is Not the Time To Pay Off Your Mortgage Early, According To Experts
Find: Home Loan Delinquency Falls Below March 2020 Levels, Lowest Since Pandemic Start
Mortgage rates remained mostly flat in 2021, closing the year at 3.27%, according to Mortgage News Daily. But they have pushed much higher this year, hitting 4.12% as of February 22, 2022.
More From GOBankingRates