Mortgage loan application volume dipped just slightly last week, continuing a weeks-long trend of relative calm, according to the Mortgage Bankers Association’s weekly survey.
The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 0.1%. Mortgage rates jumped back up to 7.14% after cooling slightly.
The adjusted purchase index rose 1%, while the unadjusted purchase index decreased by 1% and was 41% lower YOY.
“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat high inflation. The 30-year fixed rate remained above 7% for the third consecutive week, and there were increases for most other loan types,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Purchase applications increased for the first time after six weeks of declines but remained close to 2015 lows, as homebuyers remained sidelined by higher rates and ongoing economic uncertainty.”
The Federal Reserve raised interest rates another 75 BPS last week, and Chairman Jerome Powell announced that rates will go even higher than previously forecast.
“All told, the calm waters on which mortgage rates have recently sailed appear likely to get choppier,” he said.
Buyers who are already feeling the burn of market correction may find themselves completely priced out if rates continue soaring.
But competition and price appreciation are calming, opening the door for buyers who have been losing bidding wars for two years.
“Every set of market conditions comes with its own tradeoffs,” Sacramento Redfin Real Estate Agent Michael Cendejas said.
“In the spring, buyers had to race and wager over homes that flew off the market within a week. Today, many homes are staying on the market for a month or two. While mortgage rates are much higher now, buyers have the opportunity to negotiate.”
Refis, meanwhile, hit their lowest level since August 2000, falling 4%. Refinances made up just 28.1% of total applications.
The ARM share of activity rose to 12% again, after falling just under the week prior.
The FHA share of total applications dipped from 13.5% to 13.3%, with an average interest rate of 6.86%.
The VA and USDA shares remained unchanged at 10.3% and 0.5%, respectively.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased from 7.06% to 7.14%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell from 6.55% to 6.50%, and for 5/1 ARMs rose from 5.79% to 5.87%.
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