The Market Composite Index, a measure of mortgage loan application volume, decreased 6.8% 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 March 25.
On an unadjusted basis, the index decreased 6% compared with the previous week. The Refinance Index decreased 15% from the previous week and was 60% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 10% lower than the same week one year ago.
“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve,” says Mike Fratantoni, MBA’s senior vice president and chief economist. “Not surprisingly, refinance application volume declined further, as fewer borrowers have an incentive to apply at rates that are significantly higher than a year ago.”
The refinance share of mortgage activity decreased to 40.6% of total applications from 44.8% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.6% of total applications. The FHA share of total applications increased to 9.3% from 8.8% the week prior. The VA share of total applications decreased to 9.5% from 9.8% the week prior. The USDA share of total applications increased to 0.5% from 0.4% the week prior.
“Refinance application volume is now 60 percent below last year’s levels, in line with MBA’s forecast for 2022,” continues Fratantoni. “Even with the ongoing climb in rates, purchase application volumes were little changed last week. This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market. Given these hurdles, it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.80% from 4.50%, with points decreasing to 0.56 from 0.59 (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 4.40% from 4.11%, with points decreasing to 0.44 from 0.51 (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 4.66% from 4.40%, with points decreasing to 0.71 from 0.73 (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 4.01% from 3.76%, with points remaining unchanged at 0.55 (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 3.70% from 3.39%, with points remaining unchanged at 0.54 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
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