Mortgage loan application volume rose 2.3% from last week, the Mortgage Bankers Association’s (MBA) weekly survey reported.
The adjusted Market Composite Index, a measure of mortgage loan application volume, increased 2.3%. The adjusted purchase index rose 8%, while the unadjusted purchase index rose 14% and was 13% lower YOY.
The refinance index fell 3% and was down 49% YOY. Refinances made up 60.3% of total applications.
“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. The 30-year fixed rate reached 3.64% and has increased more than 30 basis points over the past two weeks. FHA and VA refinance declines drove most of the refinance slowdown,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
Loans also increased in size, with the average purchase loan size hitting a new record at $418,500.
“The continued rise in purchase loan application sizes is driven by high home-price appreciation and the lack of housing inventory on the market – especially for entry-level homes. The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.”
But the industry is betting on home price appreciation slowing in 2022, giving potential buyers some breathing room after a year of skyrocketing prices. CoreLogic has predicted home prices will grow by only 2.8% through next November.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 3.52% to 3.64%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 3.42% to 3.54%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 3.64% from 3.50%.