Decline in mortgage applications in the first week of February
FG Commerce/Getty Images
Mortgage applications fell 8.1% in the week ending February 4, 2022, seasonally adjusted from the previous week. This news was reported by the Mortgage Bankers Association (MBA) on February 9.
See: Mortgage shopping? Beware of unwanted fees as CFPB launches review of practices of banks, lenders and fintech
Find: Mortgages 101: Are online lenders a reliable option for homebuyers?
“Mortgage rates continued to climb last week, with the 30-year fixed rate climbing to 3.83%. Rates followed the US 10-year yield and other sovereign bonds as the Federal Reserve and other Key global central banks have responded to mounting inflationary pressures and signaled that they will begin to phase out accommodative policies,” said Joel Kan, associate vice president of economics and industry forecasting for the MBA.
Average loan size, however, hit a record high of $446,000. Kan said home inventory remains tight for first-time buyers.
The MBA Refinance Index was down 7% from the previous week and was also 52% higher than at the start of February 2021, due to rising interest rates. Refinance activity as a percentage of all mortgages fell from 57.3% at the end of January to 56.2% of all applications for the week ending February 4.
While the decline in mortgage applications is linked to rising interest rates and a tight home inventory, the decline in refinancing could also be attributed, in part, to people returning to work, achieving fewer home improvement projects requiring capital and economic growth resulting in increased consumer confidence. Another study, reported by Reuters, showed credit card spending rose as home refinance applications fell.
Learn: Mortgage purchase requests jump 8% and loan sizes hit record high as rates start to rise
Explore: Chase Mortgage Review: Competitive Rates and a Generous Homebuyer Subsidy Program
The MBA released average contractual interest rates for a variety of loans last week.
- The rate for 30-year fixed-rate jumbo mortgages (mortgages over $647,200) fell from 3.59% to 3.62%.
- The rate for conventional 30-year fixed-rate mortgages fell from 3.78% to 3.83%.
- The FHA-backed 30-year fixed-rate mortgage rate fell from 3.86% to 3.93%.
- The rate for 15-year fixed rate mortgages went from 3.01% to 3.16%.
- The 5/1 Adjustable Rate Mortgage (ARM) rate fell from 3.09% to 3.13%.
More from GOBankingRates