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Mortgage applications continue to fall as rates climb

Refinance index falls to lowest level since September

Mortgage applications dropped for the second straight week — falling 2.2%, according to the latest report from the Mortgage Bankers Association.

The continued increase in mortgage rates is to blame, according to MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan. Rates have jumped north of 3%, with most recent reports showing it hovering around 3.5%.

New home applications are down as well, as builders are still suffering from missing construction crews and the skyrocketing price of lumber and building materials. Home prices in general are staying high, as well.

“Purchase market activity was up 5% from a year ago, as the recovering job market and demographic factors drive demand, despite ongoing supply and affordability constraints,” Kan said. “After reaching a recent high in the last week of January, the refinance index has since fallen 26% to its lowest level since September 2020.”

The refinance index decreased 4% from the previous week, and the overall index decreased 2%. The refinance share of mortgage activity decreased as well, to 62.9% of total applications from 64.5 % the previous week. The unadjusted Purchase Index, however, increased 3% compared with the previous week and was 5% higher than the same week one year ago.

“The purchase market helped offset the slump in refinances,” Kan said.

The FHA share of total mortgage applications increased to 11.7% from 11.6% the week prior. The VA share of total mortgage applications decreased to 10.3% from 11.1% the week prior.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.28% from 3.26%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) remained unchanged at 3.34%
  • The average contract interest rate for 30-year fixed-rate mortgages increased to 3.25% from 3.20% — the second week in a row of increases
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 2.67% from 2.63%
  • The average contract interest rate for 5/1 ARMs increased to 2.82% from 2.69%

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