MBA: Mortgage Applications Decrease in Latest Weekly Survey

Mortgage applications decreased 3.7 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending August 26, 2022.

… The Refinance Index decreased 8 percent from the previous
week and was 83 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 4 percent
compared with the previous week and was 23 percent lower than the same week one year ago.

“The 30-year fixed mortgage rate increased for the second week in a row to 5.80 percent, reaching its
highest level since mid-July. Mortgage rates and Treasury yields rose last week as Federal Reserve
officials indicated that short-term rates would stay higher for longer. Mortgage rates have been volatile
over the past month, bouncing between 5.4 percent and 5.8 percent,” said Joel Kan, MBA’s Associate
Vice President of Economic and Industry Forecasting. “In another sign that market volatility has picked
up, the average rate on a jumbo loan was 5.32 percent, 48 basis points lower than for a conforming loan.
This spread reached a high of over 50 basis points in July – and had narrowed – before now widening
again.”

Added Kan, “Application volume dropped and remained at a multi-decade low last week, led by an 8
percent decline in refinance applications, which now make up only 30 percent of all applications.
Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due
to higher rates and a weaker economic outlook. However, rising inventories and slower home-price
growth could potentially bring some buyers back into the market later this year.”

…
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) increased to 5.80 percent from 5.65 percent, with points increasing to 0.71 from 0.68
(including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

With higher mortgage rates, the refinance index has declined sharply over the last several months.

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 23% year-over-year unadjusted.

The purchase index is now only 9% above the pandemic low.