Mortgage loan application volume dropped 0.6% last week, though the average purchase loan reached its second-highest amount ever, the Mortgage Bankers Association’s (MBA) weekly survey reported.
The seasonally adjusted Market Composite Index, a measure of mortgage loan application volume, fell 0.6%. The seasonally adjusted purchase index fell 3%, while the unadjusted purchase index fell 6% and was 9% lower YOY.
The refinance index rose 2% and was down 42% YOY. Refinances made up 65.2% of total applications, driven by a rate decrease to 3.27%, its lowest in four weeks.
Though applications fell, purchase loan size increased to an average of $416,200, the second-highest average amount on record.
“The elevated loan size is an indication that activity is more on the higher end of the market,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Home-price appreciation growth remains faster than historical averages and inventory, particularly for starter homes, continues to trail strong demand.”
Homeowners gained $9.1 trillion in housing value between November 2020 and November 2021, with home prices rising by double-digits for the 16th consecutive month as the number of homes for sale reached a record low.
While the market is cooling slightly, demand is expected to remain elevated in 2022. Danielle Hale, a Chief Economist for Realtor.com said in a recent article for Forbes that home sales are expected to increase another 6.6% and home prices to rise another 2.9% on top of 2021 highs.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 3.27% from 3.30%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell from 3.32% to 3.31%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 3.37% to 3.34%.