Mortgage Applications Slump as Interest Rates Tick Upward Yet Again

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Rapidly rising interest rates, a 40-year-high rate of inflation and tight housing supply are continuing to push mortgage applications down, while mortgage rates across all loan types continued to move higher — making buying a home even more expensive.

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Mortgage applications decreased for the fourth consecutive week, falling 1.3% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The data covers the week ending April 8, 2022, according to a press release.

MBA senior VP and chief economist Mike Fratantoni said in the release that mortgage rates have spiked more than 1.5 percentage points thus far in 2022. “This rapid increase in rates, caused by a much more rapid pace of rate hikes and balance sheet reduction from the Federal Reserve, is in response to the booming job market and inflation being at a 40-year high,” he said. “The jump in mortgage rates will slow the housing market and further reduce refinance demand the rest of this year.”

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Fratantoni added that higher home prices and rates — as well as ongoing supply constraints — are now expected to lead to an annual decline in existing home sales. “However, MBA continues to expect purchase originations to reach a new record in 2022,” he said, adding that although existing sales volume will be slightly lower than last year, the continued growth in new home sales and the rapid rise in home prices should deliver a smaller, but solid, 4% annual growth in purchase origination volume.

The MBA also slashed its origination outlook, now expecting total origination volume to reach $2.58 trillion this year, down from roughly $4 trillion in 2021. The previous forecast was for $2.61 trillion, CNBC reported.

In addition, the MBA said that mortgage rates across all loan types continued to move higher, with the 30-year fixed rate exceeding the 5% mark to 5.13%, the highest since Nov. 2018.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (balances greater than $647,200) increased to 4.68% from 4.51%.

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Refinance activity as a result declined to the slowest weekly pace since 2019,” Joel Kan, MBA’s associate VP of economic and industry forecasting, said in the release. The unadjusted Refinance Index decreased by 5% from the previous week and was 62% lower than the same week one year ago, the MBA said.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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