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MBA: Mortgage Applications Decrease in Latest Weekly Survey

by Calculated Risk on 11/02/2022 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 0.5 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending October 28, 2022. This week’s results include revised data to
reflect an update to last week’s survey results.

… The Refinance Index increased 0.2 percent from the previous
week and was 85 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent
compared with the previous week and was 41 percent lower than the same week one year ago.

“Mortgage applications declined for the sixth consecutive week despite a slight drop in rates. The 30-year
fixed rate decreased for the first time in over two months to 7.06 percent, but remained close to its highest
since 2002,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Apart from the ARM loan
rate, rates for all other loan types were more than three percentage points higher than they were a year
ago. These elevated rates continue to put pressure on both purchase and refinance activity and have
added to the ongoing affordability challenges impacting the broader housing market, as seen in the
deteriorating trends in housing starts and home sales.”

Added Kan: “With most homeowners locked into significantly lower rates, refinance applications continued
to run more than 80 percent below last year’s pace, while the refinance share of applications was 28.6
percent – the fifth straight week below 30 percent.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) decreased to 7.06 percent from 7.16 percent, with points decreasing to 0.73 from 0.88
(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 this year.
The refinance index is near the lowest level since the year 2000.
The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 41% year-over-year unadjusted.
The purchase index is 12% below the pandemic low and at the lowest level since 2015.

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

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