Mortgage applications increased 1.4% from one week earlier, according to data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Applications Survey for the week ending January 7. The previous week’s results included an adjustment for the holidays.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 46% compared with the previous week. The Refinance Index decreased 0.1% from the previous week and was 50% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 51% compared with the previous week and was 17% lower than the same week one year ago.
“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The 30-year fixed rate hit 3.52 percent, its highest level since March 2020. Rates at these levels are quickly closing the door on refinance opportunities for many borrowers. Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020.”
“The housing market started 2022 on a strong note,” Kan adds. “Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9 percent, and VA applications increasing more than 5 percent. MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand. However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”
The refinance share of mortgage activity decreased to 64.1% of total applications from 65.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.1% of total applications.
The FHA share of total applications increased to 9.9% from 9.2% the week prior. The VA share of total applications increased to 11.4% from 11.3% the week prior. The USDA share of total applications remained unchanged from 0.4% the week prior.
Image by Got Credit is licensed under CC BY 2.0