Housing News

Normal Contraction Patterns Leave Mortgage Apps at 22 Year Low

Posted at 2022-07-20 488 Views

The Mortgage Bankers Association (MBA) said today that its Market Composite Index, a measure of mortgage loan application volume, fell again during the week ended July 15. The Index declined 6.3 percent on a seasonally adjusted basis but was 17 percent higher than the prior week on an unadjusted basis. The week ended July 8 had been impacted by the Independence Day holiday.

The Refinance Index decreased 4 percent from the previous week and was 80 percent lower than the same week one year ago although the refinancing portion of applications did increase. The share was 31.4 percent, up from 30.8 percent the previous week.

The seasonally adjusted Purchase Index decreased 7 percent, although it was 16 percent higher before adjustment. The Index was 19 percent lower than the same week in 2021.

"It's easy to spin scary headlines when it comes to mortgage apps right now," said Matt Graham, CEO of originator rate-tracking platform MBSLive.net, "Times are tough.  Apps are indeed at 22 year lows, but the drop has followed normal patterns for both purchases and refis."



Graham added, "compared to the post-covid boom, purchase apps are indeed very low, but unlike the case for refi apps, we've seen worse as recently as 2016, not including the initial covid lockdown period, which we generally disregard when looking back at econ data."

“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”   

There were other highlights from MBA’s Weekly Mortgage Application Survey

  • The FHA share of total applications increased to 12.4 percent from 11.7 percent while the VA share fell to 10.6 percent from 11.2 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent.
  • The average contract interest rate for conforming 30-year fixed-rate mortgages (FRM) increased to 5.82 percent from 5.74 percent. Points increased to 0.65 from 0.59.
  • The rate for jumbo 30-year FRM rose 6 basis points to 5.31 percent. Points were unchanged at 0.38.
  • Thirty-year FHA-backed FRM had an average rate of 5.50 percent with 1.02 points. The prior week the rate was 5.49 percent with 1.08 point.
  • Fifteen-year mortgage rates declined 5 basis points to 4.88 percent. Points rose to 0.76 from 0.72.
  • The rate for 5/1 adjustable-rate mortgages (ARMs) decreased to 4.60 percent from 4.71 percent, with points increasing to 0.96 from 0.77. 
  • The ARM share of application activity decreased to 9.5 percent of total applications from 9.6 percent a week earlier.