U.S. Market Drop of 8.1% Seen for Mortgage Applications in Weekly Survey

Mortgage applications decreased 8.1% from one week earlier, according to data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Applications Survey for the week ending February 4, 2022. On an unadjusted basis, the Market Composite Index decreased 6% compared with the previous week.

The Refinance Index decreased 7% from the previous week and was 52% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 10% from one week earlier. The unadjusted Purchase Index decreased 3% compared with the previous week and was 12% lower than the same week one year ago. 

“Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83 percent,” observes Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies.”

“With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease,” Kan adds. “Purchase activity slowed after the previous week’s gain. Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10 percent. The average loan size again hit another record high at $446,000. Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.” 

The refinance share of mortgage activity decreased to 56.2% of total applications from 57.3% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.5% of total applications.

The FHA share of total applications increased to 8% from 7.7% the week prior. The VA share of total applications increased to 10% from 9.1% the week prior. The USDA share of total applications remained unchanged at 0.4% 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 3.83% from 3.78%, with points decreasing to 0.40 from 0.41 (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 3.62% from 3.59%, with points increasing to 0.35 from 0.31 (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 3.93% from 3.86%, with points decreasing to 0.54 from 0.55 (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 3.16% from 3.01%, with points increasing to 0.47 from 0.41 (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 3.13% from 3.09%, with points unchanged at 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.  

Image: Photo by Erik Mclean on Unsplash

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