Just before the shockwave, mortgage applications rose

Demand for mortgages rose 6.6% for the week ending June 10

Before the volatility wrought by high inflation and speculation about a rate hike by the Federal Reserve, mortgage applications increased 6.6% from the prior week, according to the latest Mortgage Bankers Association survey for the week ending June 10.

Refinancing applications increased 4% from the prior week but were still 76% lower than the same week a year prior. The seasonally adjusted purchase index, meanwhile, ticked up 8% from the prior week but was 16% down from the same week a year ago.

“Mortgage rates increased for all loan types, with the 30-year fixed rate last week jumping 25 basis points to 5.65% – the highest level since 2008. Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace,” said Joel Kan, associate vice president of economic and industry forecasting for the trade group. “Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29% below pre holiday levels.”

For the week that ended June 3, mortgage applications fell 6.5% to its lowest point in 22 years.

Multiple loan officers told HousingWire on Monday — after the MBA survey for the week had closed — that mortgage rates moved beyond 6% for even the most credit-worthy of borrowers. Several said that mortgage rates had increased about 30 basis points for several consecutive days, eroding demand.

The gradual uptick in mortgage rates and a declining stock market have contributed to fewer home sales this year. And although inventory showed big signs of a rebound in a number of metros in May, brokerages and mortgage lenders alike are shedding staff in preparation for greatly reduced volume compared to 2021.

What lenders should know about today’s economic climate

Between continuting rate hikes from the Federal Reserve, the ongoing war in Ukraine and continued economic recovery following the pandemic, mortgage lenders across the country are managing a volatile housing market. Learn how updating your mortgage technology stack can help you get ahead in today’s unpredictable lending environment.

Presented by: Polly

Due to the rapid rise in mortgage rates since January, adjustable-rate mortgages — which have a fixed rate for part of the 30-year term and then are adjustable — have grown in popularity with borrowers. But last week, the share of activity decreased slightly to 8.1% of total applications. The average interest rate for a 5/1 ARM rose to 4.57% from 4.51% a week prior, according to the MBA.

The FHA share of total applications increased to 11.8% from 11.3% the week prior. The VA share of total applications increased to 11.7% from 11.4% the week prior. The USDA share of total applications increased to 0.6% from 0.5% the week prior.

Mortgage rates on jumbo loans on average jumped to 5.25% for the week ending June 10, up from 4.99% the prior week.

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