Mortgage applications up amid rising rates

MBA shares results of weekly mortgage applications survey

Mortgage applications up amid rising rates

Mortgage applications are up by 4.2% from one week earlier, according to data from the Mortgage Bankers Association’s weekly mortgage applications survey for the week ending Friday, June 17.

The market composite index, which measures mortgage loan application volume, increased 4.2% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index saw an increase of 3% compared to last week.

The refinance index, meanwhile, decreased 3% from a week ago and was 77% lower than what was recorded during the same week last year.

Additionally, the seasonally adjusted purchase index increased 8% from the previous week. Unadjusted, this comes out as a 6% increase from a week ago and a 10% decrease from the same week of the previous year.

“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98% – the highest since November 2008 and the largest single-week increase since 2009,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “All other loan types also increased by at least 20 basis points, influenced by the Federal Reserve’s 75-basis-point rate hike and commentary that more are coming to slow inflation. Mortgage rates are now almost double what they were a year ago, leading to a 77% drop in refinance volume over the past 12 months.”

“Purchase applications increased for the second straight week – driven mainly by conventional applications – and the ARM share of applications jumped back to over 10%,” added Kan. “However, purchase activity was still 10% lower than a year ago, as inventory shortages and higher mortgage rates are dampening demand. The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price-growth is moderating.”

The refinance share of mortgage activity decreased to 29.7% of total applications from the 31.7% reported in the previous week, while the adjustable-rate mortgage (ARM) share of activity increased to 10.6% of total applications.

Moreover, the FHA share of total applications went up to 12% from 11.8% last week and the VA share decreased to 10.7% from 11.7%. The USDA share of total applications also decreased to 0.5% from 0.6% the week prior.

The MBA’s weekly survey also touched on the average contract rates for different types of loans.

For 30-year fixed-rate mortgages with conforming loan balances of $647,200 or less, the rate rose up to 5.98% from 5.65%, with points also rising to 0.77 from 0.71 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

For 15-year fixed rate mortgages, the average contract interest rate rose up to 5.05% from 4.79%, with points also rising to 0.86 from 0.80 (including the origination fee) for 80% LTV loans.

For 5/1 ARMs, the average contract rates rose up to 4.78% from 4.57%, with points also rising to 0.84 from 0.80 (including the origination fee) for 80% LTV loans.

The effective rate for all these loan types increased from last week.