It’s been a topsy-turvy 2022 for mortgage applications. And the Mortgage Bankers Association’s (MBA) Market Composite Index (MCI) for the week ending April 1, 2022, reveals another drop in applications, thus adding to that volatility trend.
Key findings:
- Mortgage application volume decreased 6.3% on a seasonally adjusted basis from the week prior. Unadjusted, the decrease was at 6%.
- The Refinance index dropped double digits to 10% from the previous week. That means it’s a staggering 62% lower than a year ago during the same period.
- The seasonally adjusted and unadjusted Purchase Index fell 3% versus the prior week. That’s 9% lower than the same period last year.
- The refinance share of mortgage activity decreased to 38.8% of total applications from 40.6% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent of total applications.
- The FHA share of total applications decreased to 9.2% from 9.3% the week prior.
- The VA share of total applications increased to 9.8% from 9.5% the previous week.
- The USDA share of total applications remained unchanged at 0.5% from the week before.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.90% from 4.80% , with points decreasing to 0.53 from 0.56 (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 4.51% from 4.40%, with points decreasing to 0.34 from 0.44 (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 4.90% from 4.66%, with points decreasing to 0.68 from 0.71 (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 4.11% from 4.01%, with points decreasing to 0.53 from 0.55 (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 3.82% from 3.70%, with points decreasing to 0.46 from 0.54 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The takeaway:
“Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months. The 30-year fixed mortgage rate increased for the fourth consecutive week to 4.90% and is now more than 1.5 percentage points higher than a year ago. As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019. The refinance share of all applications dipped to 38.8%, down from 51% a year ago,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation. However, insufficient for-sale inventory is restraining purchase activity. Additionally, the elevated average purchase loan size, and steeper 8% drop in FHA purchase applications, are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges.”
