Mortgage loan application volume rose 1.4% from last week, though refinances once again fell, the Mortgage Bankers Association’s (MBA) weekly survey reported.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.4%. The seasonally adjusted purchase index rose 2%, while the unadjusted purchase index rose 51% and was 17% lower YOY.
The refinance index fell 0,1% and was down 50% YOY. Refinances made up 64.1% of total applications, their lowest level in more than a month. Conventional refi applications are at their lowest level since January 2020.
The survey attributed the drop in refinances to increasing interest rates. The 30-year fixed rate reached 3.52%, its highest level since March 2020, and the Fed signaled this week that 2022 could bring at least three rate hikes. Philadelphia Federal Reserve Bank President Patrick Harker said he would be open to even more if inflation worsens.
“Rates at these levels are quickly closing the door on refinance opportunities for many borrowers,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%. MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand. However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 3.33% to 3.52%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell from 3.31% to 3.42%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 3.50% from 3.40%.