Mortgage applications fell 7.1% from the previous week, following an increase in rates to the highest level since the pandemic onset, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 21.
The seasonally adjusted Refinance Index decreased 12.6% in the same period, with applications falling for the fourth straight week. Meanwhile, the Purchase Index declined 1.8%.
Compared to the same week one year ago, mortgage apps overall dropped 34.6%, with a sharp decline in refinance (-46.6%) compared to purchase (-8.5%).
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, all mortgage rates continue to climb, but the 30-year fixed rate rose for the fifth consecutive week to its highest level since March 2020.
The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased from 3.64% to 3.72%. For jumbo mortgage loans (greater than $647,200), rates went to 3.56% from 3.54% the week prior.
“After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance. Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them,” Kan said in a statement.
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Regarding purchases, he said that the decline was led by a 5% drop in government applications, compared to less than 1% drop in conventional loans applications.
“The relative weakness in government purchase activity continues to contribute to higher loan sizes. The average purchase loan size was $433,500, eclipsing the previous record of $418,500 set two weeks ago.”
The refinance share of mortgage activity decreased to 55.5% of total applications last week, from 60.3% the previous week. The VA apps went from 10% to 9.9% in the same period.
The FHA share of total applications decreased from 9.3% to 8.6%. Meanwhile, the adjustable-rate mortgage share of activity increased from 3.8% of total applications to 4.4%. The USDA share of total applications went from 0.4% to 0.5%.
Source: housingwire.com