MortgageMortgage RatesOrigination

Refi interest is down 52% from last year

Rates are edging ever-closer to 4%

Mortgage applications decreased 8.1% from the previous week, a response to an uptick in mortgage rates, according to the Mortgage Bankers Association (MBA) survey for the week ending Feb. 4. The seasonally adjusted refi index fell 7.3% while the purchase index dropped 9.6%.

Compared to the same week one year ago, mortgage apps overall dropped 39.6%, with a sharp decline in refi (-52%) compared to purchase (-11.4%).

The higher rate environment has already started to take its toll on production for originators. Multichannel shops NewRez, Pennymac and loanDepot have all reported lower volumes in concert with rising rates and lower interest in rate-term refi business.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, mortgage rates continued to climb “as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies.”

The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 3.83% from 3.75% the week prior. For jumbo mortgage loans (greater than $647,200), rates climbed to 3.62% from 3.59% the week prior.

“With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease,” Kan said in a statement.

The keys to lending in a post-refi boom world

As record refinance volumes disappear, lenders need to get intimately familiar with their database of customers. Being a resource for all real estate financing needs for your customers will become more important in the next few years than ever before. 

Presented by: CIVIC Financial

Regarding purchases applications, both conventional (-10.2%) and FHA (-7.3%) saw proportional declines, while the average loan size again hit another record high at $446,000.

According to Kan, “activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.”

The survey showed that the refi share of mortgage activity decreased to 56.2% of total applications last week, from 57.3% the previous week. The VA apps rose to 10% from 9.1% in the same period.

The FHA share of total applications increased to 8% from 7.7% the prior week. Meanwhile, the adjustable-rate mortgage share of activity increased remained unchanged at 4.5% and the USDA held steady at 0.4%.   

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