MBA: Mortgage Applications Decrease in Latest Weekly Survey

by Calculated Risk on 7/27/2022 07:00:00 AM

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

Mortgage applications decreased 1.8 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending July 22, 2022.

… The Refinance Index decreased 4 percent from the previous
week and was 83 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 0.4 percent
compared with the previous week and was 18 percent lower than the same week one year ago.

“Mortgage applications declined for the fourth consecutive week to the lowest level of activity since
February 2000. Increased economic uncertainty and prevalent affordability challenges are dissuading
households from entering the market, leading to declining purchase activity that is close to lows last seen
at the onset of the pandemic,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting. “Weakening purchase applications trends in recent months have been consistent with data
showing a slowdown in sales for newly constructed homes and existing homes. A potential silver lining for
the housing market is that stabilizing mortgage rates and increases in for-sale inventory may bring some
buyers back to the market during the second half of the year.”

Added Kan, “With mortgage rates remaining well over 5 percent, refinance applications are now 83
percent below last year’s pace.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) decreased to 5.74 percent from 5.82 percent, with points decreasing to 0.61 from 0.65
(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 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 18% year-over-year unadjusted.
The purchase index is now only 13% above the pandemic low.

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

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