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MBA: Mortgage Applications Decrease in Latest Weekly Survey

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by Calculated Risk on 4/13/2022 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey; Higher Mortgage Rates to Slow Purchase Originations Growth and
Refinances

Mortgage applications decreased 1.3 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending April 8, 2022.

… The Refinance Index decreased 5 percent from the previous
week and was 62 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent
compared with the previous week and was 6 percent lower than the same week one year ago.

“Mortgage rates across all loan types continued to move higher, with the 30-year fixed rate exceeding the
5-percent mark to 5.13 percent – the highest since November 2018. Refinance activity as a result
declined to the slowest weekly pace since 2019,” said Joel Kan, MBA’s Associate Vice President of
Economic and Industry Forecasting. “Higher rates are increasing borrower interest in ARMs. Their share
of applications last week was at 7.4 percent, which was the highest share since June 2019. In a promising
sign of strong purchase demand amidst affordability challenges, both conventional and government
purchase applications increased.”

Given the faster than expected increase in mortgage rates, and the likelihood of more aggressive actions
from the Federal Reserve to curb inflation, MBA’s April 2022 forecast now calls for mortgage originations
to total $2.58 trillion in 2022 – a 35.5 percent decline from 2021. Purchase originations are still forecasted
to reach a record $1.72 trillion this year – a 4 percent increase from 2021. Refinance originations are now
expected to fall 64 percent to $841 billion.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 5.13 percent from 4.90 percent, with points increasing to 0.63 from 0.53
(including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index has declined sharply over the last several months.
The refinance index is at the lowest level since March 2019.
The second graph shows the MBA mortgage purchase index


According to the MBA, purchase activity is down 6% year-over-year unadjusted.

Note: Red is a four-week average (blue is weekly).

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