Mortgage Applications Hit Lowest Point Since 2019 Amid Rising Rates

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Mortgage applications for the week ending February 18 declined to their lowest level since December 2019 as mortgage rates continued to push higher, according to new data from the Mortgage Bankers Association.

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The Market Composite Index, which measures mortgage loan application volume, declined 13.1% on a seasonally adjusted basis from one week earlier, the MBA said on Wednesday. On an unadjusted basis, the Index decreased 11% from the prior week. The drop in applications came as the 30-year fixed rate rose to 4.06% — almost a full percentage point higher than a year ago.

“Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022. Conventional refinances, in particular, saw a 17 percent decrease last week,” Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said in a press release. “Purchase applications, already constrained by elevated sales prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week. While the average loan size did not increase this week, it remained close to the survey’s record high.”

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The news came after last week’s MBA report showing that mortgage applications for January 2022 declined 12.5% from the previous year but increased 10% on a month-over-month basis.

For the week ending February 18, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.06% from 4.05% the week before, with points increasing to 0.48 from 0.45 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate also increased from last week.

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Mortgage rates remained mostly flat in 2021, closing the year at 3.27%, according to Mortgage News Daily. But they have pushed much higher this year, hitting 4.12% as of February 22, 2022.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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