MBA: Mortgage Applications Decrease in Latest Weekly Survey

Mortgage applications decreased 1.9 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending December 2, 2022. Last week’s results include an adjustment for
the observance of the Thanksgiving holiday.

… The Refinance Index increased 5 percent from the previous
week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 31 percent
compared with the previous week and was 40 percent lower than the same week one year ago.

“Mortgage applications decreased 2 percent compared to the Thanksgiving holiday-adjusted results from
the previous week, even as mortgage rates continued to trend lower. Rates decreased for most loan
products, with the 30-year fixed declining 8 basis points to 6.41 percent after reaching 7.16 percent in
October,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate was
73 basis points lower than a month ago – but was still more than three percentage points higher than in
December 2021. Additionally, the pace of refinancing remained around 80 percent lower than a year ago.”

Added Kan, “Purchase activity slowed last week, with a drop in conventional purchase applications
partially offset by an increase in FHA and USDA loan applications. The average loan size for purchase
applications decreased to $387,300 – its lowest level since January 2021. The decrease was consistent
with slightly stronger government applications and a rapidly cooling home-price environment.”
…
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($647,200 or less) decreased to 6.41 percent from 6.49 percent, with points decreasing to 0.63 from 0.68
(including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

With higher mortgage rates, the refinance index has declined sharply this year.

The refinance index is near the lowest level since the year 2000.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 40% year-over-year unadjusted.

The purchase index is 4% below the pandemic low and up slightly from the lowest level since 2015.