Mortgage Rate Rise Continues to Depress Application Activity — RISMedia

With mortgage rates continuing to rise, purchase applications summarily continued their decline this week, dropping 1.7% from one week earlier, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending October 21, 2022.

Here’s this week’s data:

  • The Market Composite Index, a measure of mortgage loan application volume, decreased 1.7% on a seasonally adjusted basis from one week earlier.
  • On an unadjusted basis, the Index decreased 2% compared with the previous week.
  • The Refinance Index increased 0.1% from the previous week and was 86% lower than the same week one year ago.
  • The seasonally adjusted Purchase Index decreased 2% from one week earlier.
  • The unadjusted Purchase Index decreased 3% compared with the previous week and was 42% lower than the same week one year ago.
  • The refinance share of mortgage activity increased to 28.8% of total applications from 28.3% the previous week.
  • The adjustable-rate mortgage (ARM) share of activity decreased to 12.7% of total applications.
  • The FHA share of total applications increased to 13.9% from 13.6% the week prior.
  • The VA share of total applications remained unchanged at 10.7% from the week prior.
  • The USDA share of total applications remained unchanged at 0.5% from the week prior.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.16% from 6.94%, with points decreasing to 0.88 from0.95 (including the origination fee) for 80% loan-to-value ratio (LTV) 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 6.53% from 6.31%, with points increasing to 0.68 from 0.67 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.79% from 6.63%, with points decreasing to 1.59 from 1.60 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 6.39% from 6.09%, with points increasing to 1.52 from 1.18 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 5.86% from 5.65%, with points decreasing to 0.88 from 0.90 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

 The takeaway:

“Mortgage rates increased for the 10th consecutive week, with the 30-year fixed rate reaching 7.16%, the highest rate since 2001. The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” said Joel Kan, MBA’s vice president and deputy chief economist. “Refinance applications were essentially unchanged, but purchase applications declined 2% to the slowest pace since 2015–over 40% behind last year’s pace. Despite higher rates and lower overall application activity, there was a slight increase in FHA purchase applications, as FHA rates remained lower than conventional loan rates.”

Added Kan, “MBA’s forecast expects both economic and housing market weakness in 2023 to drive a 3% decline in purchase originations, while refinance volume is anticipated to decline by 24%.”



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