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

by Calculated Risk on 10/05/2022 07:00:00 AM

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

Mortgage applications decreased 14.2 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending September 30, 2022.

… The Refinance Index decreased 18 percent from the previous
week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 13 percent from one week earlier. The unadjusted Purchase Index decreased 13
percent compared with the previous week and was 37 percent lower than the same week one year ago.

“Mortgage rates continued to climb last week, causing another pullback in overall application activity,
which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75 percent last week – the
highest rate since 2006,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting. “The current rate has more than doubled over the past year and has increased 130 basis
points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and
is also impacting purchase applications, which have fallen 37 percent behind last year’s pace.
Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we
saw the ARM share rise further to almost 12 percent of applications.”

Added Kan, “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted
widespread closings and evacuations. Applications in Florida fell 31 percent, compared to 14 percent
overall, on a non-seasonally adjusted basis.”


The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 6.75 percent from 6.52 percent, with points decreasing to 0.95 from 1.15
(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 37% year-over-year unadjusted.
The purchase index is 5% 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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