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Economy in Brief

U.S. Mortgage Applications Continued to Slide Amid Higher Rates
by Peter D'Antonio  May 18, 2022

•Total applications fell 11% in the latest week.

•The uptrend in mortgage rates have driven big swings in the mortgage market.

•Applications for refinancing collapsed.

The Mortgage Bankers Association's Loan Applications Index fell 11.0% w/w (-55.9% y/y). This latest decline is part of a trend slide of 55.9% y/y, with especially steep declines coming in the past three months. In fact, the weekly readings have fallen in 12 of the past 14 months.

The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack. Applications for refinancing continued their descent, falling 9.5% w/w (-75.8% y/y). This was the ninth consecutive weekly decline. Applications for purchase fell 11.9% w/w (-15.9% y/y) in the latest week following a 4.5% weekly rise in the prior week. The share of applications for refinancing held roughly steady at just 33% in the week ended May 13, nearly the lowest reading since December 2000.

Applications for fixed-rate loans fell 10.5% w/w in the week ended May 13 for a 58.8% drop y/y, with the bulk of that decline occurring in the first half of this year. Meanwhile, applications for adjustable-rate mortgages have trended in the opposite direction. Although the share of adjustable rate mortgages reversed much of the previous week’s gain, they are up 75.2% from the end of 2021.

The steep rise in mortgage interest rates this year has driven these sharp changes in mortgage applications. While the effective rate on 30-year fixed-rate loans edged down 4bps to 5.70% in the latest week, it remained near the highest reading since June 2009. The same can be said for 15-year fixed mortgages, 30-year jumbos and 5-year ARMs. To give an idea of the magnitude of this year’s changes in the mortgage market, the 30-year fixed rate was 2.57% in the last week of 2021.

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 SURVEYS database.

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