Lending

Market sees slight drop in mortgage applications over past week, MBA reports

The Composite Market Index, a measure of the volume of mortgage applications, fell 0.7% on a seasonally adjusted basis from the previous week, data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Application Survey for the week ending February 25, 2022.

On an unadjusted basis, the index rose 1% from the previous week. The refinancing index rose 1% from the previous week and was 56% lower than the same week a year ago. The seasonally adjusted purchase index fell 2% from the previous week. The unadjusted buy index was up 1% from the previous week and was 9% lower than the same week a year ago.

Mortgage rates hit multi-year highs last week, which dampened application activity,” said Joel Kan, associate vice president of economic and industry forecasts at MBA. “The 30-year fixed rate hit its highest level since 2019 at 4.15%, and the refinancing share of requests fell below 50%. Although there has been an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market.

“Buying activity has remained weak, but average loan size has increased again, indicating that home price growth remains strong and more activity is occurring at the top. end of the market,” adds Kan. “We will continue to assess the potential impact on mortgage demand from the sharp decline in interest rates this week due to the invasion of Ukraine.

The refinancing share of mortgage activity fell to 49.9% of total applications from 50.1% the previous week. The share of adjustable rate mortgage (ARM) activity increased to 5.3% of total applications.

FHA’s share of total claims fell to 8.6% from 8.7% the previous week. VA’s share of total claims rose to 10.2% from 9.9% the previous week. USDA’s share of total claims remained unchanged at 0.4% from the previous week.

The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell from 4.06% to 4.15%, with points rising from 0.48 at 0.44 (including origination fees) for 80% loan-to-loan to value (LTV) ratio. The effective rate increased compared to last week.

The average contractual interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) fell from 3.84% to 3.88%, with points rising from 0.45 at 0.40 (including origination fees) for 80% LTV loans. The effective rate increased compared to last week.

The average contractual interest rate for FHA-backed 30-year fixed-rate mortgages increased from 4.09% to 4.15%, with points rising from 0.56 to 0.74 (including origination fee) for 80% LTV loans. The effective rate increased compared to last week.

The average contractual interest rate for 15-year fixed rate mortgages increased from 3.42% to 3.47%, with points increasing from 0.45 to 0.47 (including origination fees) for 80% LTV loans. The effective rate increased compared to last week. Average contract interest rate for 5/1 ARMs increased from 3.26% to 3.44%, with points rising from 0.34 to 0.35 (including origination fees) for loans 80% LTV. The effective rate increased compared to last week.

Image: Photo by Romain Dancre to Unsplash