Home Purchase Apps Down 10%, Refi Contraction Continues

Mortgage application volume surged 12 percent two weeks ago but gave back a large chunk of that gain during the week ended February 4. last week. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of that volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier and lost 6 percent on an unadjusted basis. The Refinance Index decreased 7 percent from the previous week and was 52 percent lower than the same week one year ago. The refinance share of mortgage activity dipped to 56.2 percent of total applications from 57.3 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index fell 10 percent from one week earlier and was down 3 percent before adjustment. Applications were 12 percent lower than the same week in 2021. [purchaseappschart] Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83 percent. Mortgage rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies. With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease.   “Purchase activity slowed after the previous week’s gain,” Kan said. “Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10 percent. The average loan size again hit another record high at $446,000. Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.”