Mortgage application activity continued to plunge this week as rising interest rates tanked refi application volume, according to data released Wednesday
by the Mortgage Bankers Association.
The MBA's seasonally-adjusted index, which tracks both purchase and refinance application activity, fell 19.2 percent for the week ended Feb. 22, to 665.1. One week earlier, the index stood at 822.8; in two weeks, the index has fallen 37.5 percent.
The application index is calibrated to March 16, 1990; a reading of 665.1 means that application activity was roughly 6.6 times greater than when the index was first established.
A continued steep drop in refinancing activity drove the overall drop in application volume, as the MBA said that refi applications decreased 30.4 percent from the previous week; purchase applications actually increased slightly, rising 0.2 percent. On a seasonally-adjusted basis, both conventional and government (FHA, VA) application activity fell as well, according to the report.
The rate picture
After touching lows earlier this year that sparked a mini-refinance boom for the industry, mortgage rates -- particularly for fixed-rate loans -- have been rising both quickly and steadily. Last week, mortgage rates posted their biggest weekly rise in 14 years
, with the average conforming 30-year fixed rate mortgage jumping 41 basis points to 6.37 percent, according to a weekly survey conducted by Bankrate.com.
This week the same average rate on a 30-year fixed-rate mortgage reached 6.41 percent, while rates on adjustable rate mortgage products began to fall. Average rates on a 5-year ARM dropped 9 basis points to 5.68 percent, Bankrate.com reported Thursday morning
The spread between conforming and jumbo loans remained high, with terms on a 30-year fixed-rate jumbo mortgage falling to 7.43 percent. That's more than 100 basis points in rate spread, and an amount that many primary market participants say is hurting the ability of borrowers in higher-priced markets to qualify for either purchases or refinancing.
It's too early to tell what sort of rate benefits will come for the 'jumbo conforming' mortgages recently passed by Congress, which temporarily raise the conforming loan limit to as much as $750,000 in certain high-cost areas. Most sources that have spoken with HW have said they expected the newly-conforming loans to be priced somewhere in between current jumbos and traditional conforming loan product.