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MBA: Mortgage Applications Decrease in Latest Weekly Survey; Purchase Activity 7% Below Pandemic Low

by Calculated Risk on 10/12/2022 07:00:00 AM

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

Mortgage applications decreased 2.0 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending October 7, 2022.

… The Refinance Index decreased 2 percent from the previous
week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent
compared with the previous week and was 39 percent lower than the same week one year ago.

“Mortgage rates moved higher once again during the first week of the fourth quarter of 2022, with the 30-
year conforming rate reaching 6.81 percent, the highest level since 2006. Mortgage rates increased
across all product types in MBA’s survey, with the largest, a 20-basis-point increase, for 5-year ARM
loans. The ARM share of applications remained quite high at 11.7 percent – just below last week’s level,”
said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Application volumes for both
refinancing and home purchases declined and continue to fall further behind last year’s record levels. The
news that job growth and wage growth continued in September is positive for the housing market, as
higher incomes support housing demand. However, it also pushed off the possibility of any near-term
pivot from the Federal Reserve on its plans for additional rate hikes.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 6.81 percent from 6.75 percent, with points increasing to 0.97 from 0.95
(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 39% year-over-year unadjusted.
The purchase index is 7% 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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