US mortgage applications down as rates hit record-high

Mortgage application volume decreased week over week as mortgage rates jumped to a three-year high.

The Mortgage Bankers Association reported Wednesday that overall mortgage applications dropped 0.7% on a seasonally adjusted basis for the week ending Feb.25. However, applications were up by 1% on an unadjusted basis from the previous week.

“Mortgage rates last week reached multi-year highs, putting a damper on applications activity,” said Joel Kan, AVP of economic and industry forecasting at MBA. “The 30-year fixed-rate reached its highest level since 2019 at 4.15%, and the refinance share of applications dipped below 50%. Although there was an increase in government refinance applications, higher rates continue to push potential refinance borrowers out of the market.”

Read more: US mortgage rates hit record high amid inflation woes

MBA’s refinance index posted a 1% week-over-week gain and was 56% lower than the same week one year ago. The purchase index declined 2% from the prior week and was down by 9% from last year.

“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,” Kan said. “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.” 

Of total applications, the refi share of mortgage activity fell to 49.9% 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 was down one basis point to 8.6%, the VA share of total applications was up three basis points to 10.2%, and the USDA share of total applications remained unchanged at 0.4%.