According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended March 25, mortgage rates hit their highest possible level in three years this past week, sending re-mortgage applications and general applications plummeting.
Also, Market Composite Index dropped 6.3% from the previous week on an adjusted basis seasonally. The Index fell 6% on an unadjusted basis from last week.
Refinances, in specific, took a hit. The uncorrected Refinance Index dropped 15% from the week before and was down 60% from the same week last year. The refinance total mortgage applications share fell to 40.6% from 44.8% the week before.
The number of purchase applications increased. According to MBA, the annualized Purchase Index rose by 1% from the previous week. The Purchase Index rose 1% from the past week but was 10% lesser than the equivalent week a year ago.
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The FHA’s percentage of overall applications grew to 9.3% from 8.8% the previous week. The percentage of total applications submitted by veterans dropped to 9.5% from 9.8% the week before. USDA’s percentage of total applications grew to 0.5% this week, up from 0.4% the week before.
Mortgage rates hit their highest possible level in over three years a week ago as investors factored in the effect of the Federal Reserve’s tightening monetary policy.
MBA Chief Economist Mike Fratantoni said that refinance application traffic dropped even further since fewer borrowers had a motivation to reapply at much higher rates compared to a year earlier. The volume of refinancing applications is now 60% lower than last year, according to the MBA’s prediction for 2022.
Fratantoni noted that purchase application amounts were relatively unchanged last week despite the continued rise in rates. This is incredibly fortunate because we are in the midst of the spring home purchases season. Those looking for a home contend with higher and volatile mortgage rates and the continuing shortage of available homes.
According to Fratantoni, considering these obstacles, the fact that purchase applications quantity has not decreased looks encouraging, as several potential purchasers are undoubtedly feeling the pinch of rising rates on purchasing power.
Also, the MBA said that the mean 30-year mortgages contract rates with complying loan balances (less than $647,200) expanded to 4.80% from 4.50%, with points falling from 0.59 to 0.56 (as well as origination fee) for loans with an 80% loan-to-value ratio. Interestingly, the effective rate has risen since the previous week.
For 80% LTV loans, the median contracts interest ratio for a 30-year fixed-rate mortgage with colossal loan balances (more than $647,200) was up from 4.11% to 4.4%, with points dropping from 0.51 to 0.44. Equally, the effective rate has risen since the previous week.
The median contractor rate for FHA-backed 30-year fixed-rate mortgages increased from 4.4% to 4.66%, with points dropping from 0.73 to 0.71 for 80% LTV loans. On the other hand, the mean contract interest rate for a 15-year fixed-rate mortgage increased from 3.76% to 4.01%.