As interest rates rise, homebuyer and homeowner demand for both purchase and refinance mortgages drop to 2019 pace.

Purchase and Refinance Applications Fall for Third Consecutive Week

For the week ending February 18, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, applications for purchase loans dropped -10% w/w and -6% y/y.  These levels are the lowest since 2019.

Applications for refinance loans dropped -16% w/w and an eye-opening -68% y/y.  Refinance requests accounted for just 50.1% of all mortgage applications compared to 68.5% last year at this same time.

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Specifics of Mortgage Activity

Mortgage applications dropped to the lowest level in over two years.

“Higher mortgage rates have quickly shut off refinances, with activity down six of the first seven weeks of 2022,” said MBA forecaster Joel Kan.  “Conventional refinances in particular saw a -17% decrease last week.  Purchase applications, already constrained by elevated sale prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week.”

Here are the average rates in place last week among the following loan types:

  • 30- year fixed-rate conforming mortgages – 4.06%
  • 30-year fixed-rate jumbo mortgages – 3.84%
  • 30-year fixed-rate FHA mortgages – 4.09%
  • 15-year fixed-rate mortgages – 3.42%
  •  5/1 adjustable mortgages (ARMs) – 3.26%

Loan Request Percentages

  • Conforming 30-year fixed-rate mortgages (vast majority) – +4%
  • ARM loans – 5.1% of all loans, up from 2.7% last year
  • FHA mortgages – 8.7%
  • VA mortgages – 9.9%

Comments from Federal Reserve Board of Governors Member

Michelle Bowman, a member of the Federal Reserve Board of Governors, spoke at the American Bankers Association Community Banking Conference held in Palm Desert CA on February 21.

Bowman said that she anticipates “uncomfortably high inflation…at least through the first half of 2022.”

Bowman also indicated in her remarks at the banking conference that she supports raising the federal funds rate at the coming meeting of the Federal Reserve that will end on March 16 with a press conference announcing the Fed’sstrategies on interest rates.

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Thanks to the Mortgage Bankers Association and Inman.



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