Rising interest rates depress this week’s mortgage applications

Purchase applications helped buoy an otherwise depressed week of borrower activity in the face of growing interest rates.

The Mortgage Bankers Association’s Market Composite Index — a measure of loan application volume — fell 2.2% from the week before on a seasonally adjusted basis, with the refinance segment dropping 4% week-over-week and 39% year-over-year.

It marks the lowest point for the refi index since September 2020. The refi share of application activity also fell weekly to 62.9% from 64.5%. However, the purchase application index grew in contrast, climbing 2% on a seasonally adjusted basis over last week. Unadjusted, purchases rose 3% from the previous week and by 5% annually.

The average for the 30-year fixed rate mortgage increased to its highest level since June 2020, having surged 36 basis points from the beginning of February.

“The run-up in rates continues to reduce incentives for potential refinance borrowers,” Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. “The purchase market helped offset the slump in refinances, as the recovering job market and demographic factors drive demand, despite ongoing supply and affordability constraints.”

The adjustable-rate mortgage share of activity dipped to 2.7% from 3% the week before. By product type, Federal Housing Administration mortgages made up 11.7% of this week's applications, up slightly from 11.6% week-over-week, with Veterans Affairs loans decreasing to 10.3% from 11.1% while the U.S. Department of Agriculture/Rural Housing Service share remained at 0.4%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $548,250 or less — rose to 3.28% from 3.26%.

The average contract interest rate for jumbo loans — those over $548,250 in value — held at 3.34%. The average contract interest rate for the 30-year FHA-insured mortgage jumped to 3.25% from 3.2%.

The average contract interest rate for 15-year FRMs increased to 2.67% from 2.63% and the average contract interest rate for 5/1 ARMs spiked to 2.82% from 2.69%, with points falling to 0.3 from 0.37.