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MBA: Mortgage Applications Decrease in Latest Weekly Survey; Lowest Level Since 1997

by Calculated Risk on 10/19/2022 07:00:00 AM

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

Mortgage applications decreased 4.5 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending October 14, 2022.

… The Refinance Index decreased 7 percent from the previous week and
was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index
decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared
with the previous week and was 38 percent lower than the same week one year ago.

“Mortgage applications are now into their fourth month of declines, dropping to the lowest level since 1997,
as the 30-year fixed mortgage rate hit 6.94 percent – the highest level since 2002,” said Joel Kan, MBA’s
Vice President and Deputy Chief Economist. “The speed and level to which rates have climbed this year
have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase
market. Residential housing activity ranging from new housing starts to home sales have been on downward
trends coinciding with the rise in rates. The current 30-year fixed rate is now well over three percentage
points higher than a year ago, and both purchase and refinance applications were down 38 percent and 86
percent over the year, respectively.”

Added Kan: “With rates at these high levels, the ARM share rose to 12.8 percent of all applications, which
was the highest share since March 2008. ARM loans continue to remain a viable option for borrowers who
are still trying to find ways to reduce their monthly payments.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 6.94 percent from 6.81 percent, with points decreasing to 0.95 from 0.97
(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 at the lowest level since the year 2000.
The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 38% year-over-year unadjusted.
The purchase index is 10% 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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