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Drop in Rates Drives Mortgage App Volume Upward

Despite the continued Russian-Ukrainian conflict and a spike in U.S. gasoline prices, mortgage application volume rose 8.5% week-over-week, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA).

The MBA’s Refinance Index increased 9% from the previous week, and was 50% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 9% from one week earlier. The unadjusted Purchase Index increased 11%, compared with the previous week, and was 7% lower than the same week one year ago.

The refinance share of mortgage activity decreased to 49.5% of total applications from 49.9% the previous week, while the adjustable-rate mortgage (ARM) share of activity decreased to 5.2% of total applications.

"Mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality, which pushed U.S. Treasury yields lower,” noted Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. “A six-basis-point decline in the 30-year fixed-rate mortgage led to a slight rebound in total refinance activity, with a larger gain in government refinances. Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other.”

Freddie Mac reported last week that the 30-year fixed-rate mortgage (FRM) dropped to 3.76%, down from the previous week when it averaged 3.89%.

"Purchase activity also increased, as prospective buyers acted on lower rates, and the early start of the spring buying season,” added Kan. “The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth."

By loan type, the FHA share of total applications increased slightly to 8.7% from 8.6% the week prior, and the VA share of total applications increased to 10.4% from 10.2% the week prior. The USDA share of total applications increased to 0.5% from 0.4% the week prior.

Supply issues linger, thus forcing the hand of prospective buyers, as Redfin reported this week, some 5,897 homes nationwide sold for at least $100,000 over asking price at the beginning of 2022, up from 2,241 compared to the same period in 2021. Redfin reported that January was the most competitive month on record, with 70% of home offers written by Redfin agents facing bidding wars. As a result of fierce competition, the median home-sale price rose 14% year-over-year to $376,200, falling short of the all-time high.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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