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Economy in Brief

U.S. Mortgage Applications Decline Again As Rates Rise
by Sandy Batten  February 16, 2022

• Total applications fall for third week in last four.

• Led by decline in applications for refinancing.

• 30-year mortgage interest rates rose to highest level since July 2019.

The Mortgage Bankers Association's Loan Applications Index declined 5.4% w/w (-39.8% y/y) in the week ended February 11 following an 8.1% w/w decline in the previous week. This was the third weekly decline in the past four weeks. Applications to purchase a home fell 1.2% w/w (-6.8% y/y) on top of a 9.6% w/w drop in the prior week. Refinancing applications slumped 8.9% w/w (-54.1% y/y) in the week ended February 11, their seventh weekly decline in the past eight weeks, after a 7.3% w/w fall in the previous week.

The share of applications for refinancing fell to 52.8% in the week ended February 11 from 56.2% in the previous week. This share has generally fallen from 64.3% averaged in December. The adjustable-rate mortgage (ARM) share of activity rose to 5.0%, the highest since March 2020, from 4.5% in the prior week.

Mortgage interest rates continued to rise, reflecting a further rise in inflation and increased market expectations of a more aggressive policy response by the Federal Reserve. The effective interest rate on a 30-year mortgage rose 23bps to 4.18% in the week ended February 11 from 3.95% in the prior week. This was the eight consecutive weekly increase and pushed the rate to its highest level since the week ended July 26, 2019. The effective rate on a 15-year mortgage increased to 21bps to 3.49%, the highest since the week of November 8, 2019, from 3.28% in the previous week. This rate has risen 38bps in the past two weeks. The rate on a Jumbo 30-year mortgage rose 21bps to 3.93%, its highest since April 3, 2020, from 3.72%. The interest rate on a 5-year adjustable-rate mortgage increased 28bps to 3.54%, the highest since December 6, 2019.

Applications for fixed-rate loans fell 5.9% last week (-41.4% y/y) on top of an 8.1% decline in the previous week. Applications for adjustable-rate mortgages rose 4.4% w/w (+23.3% y/y) after an 8.4% weekly fall in the previous week.

The average size of a mortgage loan rose 1.7% w/w to $372,600 in the week ended February 11, the second highest on record, from $366,200 in the previous week. The average size of a loan for purchase rose to another record $453,000 from $446,900 in the previous week. The average size of a refinanced loan fell to $300,600 from $303,400 in the previous week.

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (%, SA) 02/11/22 02/04/22 01/28/22 Y/Y 2021 2020 2019
Total Market Index -5.4 -8.1 12.0 -39.8 -8.0 63.0 32.4
  Purchase -1.2 -9.6 4.0 -6.8 -2.3 11.4 6.6
  Refinancing -8.9 -7.3 18.4 -54.1 -10.7 111.0 71.1
30-Year Effective Mortgage Interest Rate (%) 4.18 3.95 3.89 3.19

(Feb. '21)

3.25 3.40 4.34
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