Mortgage Applications Drop as Rates Surge in Latest Week
Summary
- Purchase loan applications decline and refinanced loans tumble.
- Effective rates on loans post double-digit rises.
- Average loan size drops.
Mortgage applications dropped 8.5% (+32.4% y/y) in the week ended April 11 after a surge of 20.0% (49.4% y/y) in the week ended April 4, according to the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a home declined 4.9% (+12.8% y/y) in the latest week, after rising 9.2% (24.5% y/y) in the prior week. Applications to refinance existing mortgages declined 12.4% (+68.1% y/y) in the week ended April 11, after surging 35.3% (92.9% y/y) in the week ended April 4.
The effective interest rate on a 30-year fixed rate loan rose 20bps to 6.99% in the week ended April 11 from 6.79% in the week ended April 4. The effective rate on a 15-year fixed rate loan rose 18bps to 6.27% in the April 11 week from 6.09% in the week ended April 4. The rate on a 30-year jumbo loan rose 16bps to 6.93% in the latest week from 6.77% the prior week, while the rate on a 5-year ARM rose 27bps to 6.31% in the week ended April 11 from 6.04% in the week ended April 4.
The share of applications to refinance an existing mortgage declined to 41.3% in the week ended April 11 from 43.6% in the week ended April 4. That share had reached a low level of 38.7% in the week of February 14. The share of loans with an adjustable rate rose to 9.6% in the latest week, following a rise to 8.6% in the prior week.
The average size of a mortgage loan dropped 3.3% (+7.5% y/y) to $415,100 in the week ended April 11, after rising 8.2% (10.6% y/y) to $429,200 in the week ended April 4. The average size of a loan to purchase a home fell 1.5% (-0.6% y/y) to $445,300 in the latest week from $452,100 in the week prior. The average size of a loan to refinance an outstanding mortgage declined 6.8% (+45.8% y/y) to $372,300 in the week ended April 11, from $399,600 in the week ended April 4.
The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s SURVEYS database.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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