The Market Composite Index, a measure of mortgage loan application volume, decreased 0.7% on a seasonally adjusted basis from one week earlier, according to data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Applications Survey for the week ending February 25.
On an unadjusted basis, the index increased 1% compared with the previous week. The Refinance Index increased 1% from the previous week and was 56% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 9% lower than the same week one year ago.
“Mortgage rates last week reached multi-year highs, putting a damper on applications activity,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The 30-year fixed rate reached its highest level since 2019 at 4.15 percent, and the refinance share of applications dipped below 50 percent. Although there was an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market.”
“Purchase activity remained weak, but the average loan size increased again, which indicates that home-price growth remains strong, and a greater share of the activity is occurring at the higher end of the market,” adds Kan. “We will continue to assess the potential impact on mortgage demand from the sharp drop in interest rates this week due to the invasion of Ukraine.”
The refinance share of mortgage activity decreased to 49.9% of total applications from 50.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.3% of total applications.
The FHA share of total applications decreased to 8.6% from 8.7% the week prior. The VA share of total applications increased to 10.2% from 9.9% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.15% from 4.06%, with points decreasing to 0.44 from 0.48 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 3.88% from 3.84%, with points decreasing to 0.40 from 0.45 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.15% from 4.09%, with points increasing to 0.74 from 0.56 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.47% from 3.42%, with points increasing to 0.47 from 0.45 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs increased to 3.44% from 3.26%, with points increasing to 0.35 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
Photo by Romain Dancre on Unsplash