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Mortgage applications drop as rates spike

Mortgage rates reached 4.27%, the highest level since May 2019

Interest in residential mortgages fell 1.2% for the week ending March 11 as mortgage rates rose to their highest levels since May 2019, according to the Mortgage Bankers Association‘s latest survey.

“Mortgage rates continue to be volatile due to the significant uncertainty regarding Federal Reserve policy and the situation in Ukraine,” said Joel Kan, associate vice president of economic and industry forecasting for the MBA. “Investors are weighing the impacts of rapidly increasing inflation in the U.S. and many other parts of the world against the potential for a slowdown in economic growth due to a renewed bout of supply-chain constraints.”

Mortgage rates, which recently hit 4.27% for 30-year-fixed rate mortgages, are now a full percentage point higher than a year ago. That’s led to a significant decline in refinance activity, both for conventional and government loans.

According to the MBA, refi applications fell 3% from the prior week and were down 49% from a year ago. The seasonally adjusted purchase index increased 1% from one week earlier; the unadjusted purchase index increased 2% from the prior week but was 8% lower than the same week a year ago, largely due to a decline in inventory.

“Purchase applications slightly increased, with both conventional and VA loan applications seeing gains,” said Kan. “The average purchase application loan size remained elevated at $453,200 – the second- highest amount in MBA’s survey.”

The MBA found that the adjustable-rate mortgage share of the activity increased to 5.6% of total applications.


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The FHA share of total applications remained unchanged at 8.7% from the week prior, and the share of VA applications increased to 10.5% from 10.4%.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 4.02% from 3.79%, with points decreasing to 0.37 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey showed that the refi share of mortgage activity decreased to 48.4% of total applications last week, from 49.5% the previous week.

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