Mortgage Applications Decrease in the First Week of February
Mortgage applications have decreased by 8.1% in the week ending Feb. 4, 2022, seasonally adjusted from the week prior. This news was reported by the Mortgage Bankers Association (MBA) on Feb. 9.
“Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83 percent. Rates followed the U.S. 10-year yield and other sovereign bonds 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,” said Joel Kan, associate vice president of economic and industry forecasting for MBA.
The average loan size, however, hit a record high at $446,000. Kan said that home inventory remains tight for entry-level buyers.
The MBA Refinance Index decreased 7% from the prior week, and was also 52% higher than in early Feb. 2021, a result of rising interest rates. Refinance activity as a percentage of all mortgages dropped from 57.3% in late January to 56.2% of all applications for the week ending Feb. 4.
While the drop in mortgage applications relates to rising interest rates and a tight home inventory, the dip in refinancing could also be attributable, in part, to people returning to work, taking on fewer home improvement projects that would require capital, and economic growth leading to an increase in consumer confidence. Another study, reported by Reuters, showed that credit card spending has increased as home refinancing applications have dropped.
The MBA reported the average contract interest rates for a variety of loans last week.
- The rate for jumbo 30-year fixed rate mortgages (mortgages greater than $647,200) rose from 3.59% to 3.62%.
- The rate for conventional 30-year fixed rate mortgages rose from 3.78% to 3.83%.
- The rate for FHA-backed, 30-year fixed rate mortgages increased from 3.86% to 3.93%.
- The rate for 15-year fixed rate mortgages increased from 3.01% to 3.16%.
- The rate for 5/1 adjustable-rate mortgages (ARMs) rose from 3.09% to 3.13%.
More From GOBankingRates