U.S. Mortgage Applications Continue to Decline as Interest Rates Rise

Mortgage applications declined 5.7% (-59.3% y/y) in the week ended February 24, following a decline of 13.3% (-57.2% y/y) in the prior week ended February 17. The decline brought them to the lowest level since the first week of January and 19% below their end-of-January level. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

Applications for home purchase loans dropped 5.6% (-43.6% y/y) in the week ended February 24 after an 18.1% (-41.3% y/y) plunge the prior week. The purchase index is at a 28-year low for a second consecutive week. Applications to refinance an existing loan fell 5.5% (-73.7% y/y) after a decline of 2.2% (-72.0% y/y) the prior week.

The percentage of applications for refinancing an existing loan ebbed down to 31.8% in the week ended February 24, from 32.5% in the week prior week, but still up from 26.1% at the end of November. The percentage of ARM loans rose to 8.1% in the week ended February 24, up from 7.6% in the week of February 17, though still down from a recent high of 12.8% in the second week of October.

The effective interest rate on a 30-year fixed-rate loan rose to 6.93% in the week ended February 24, up from 6.84% the prior week and from 6.36% merely three weeks earlier. It remained below a high of 7.42% in the third week of October. The effective rate on 15-year fixed-rate mortgages rose to 6.36% last week from 6.22% in the prior week and 5.80% three weeks earlier. The rate on 30-year Jumbo loans stayed stable at 6.59%. The rate on a 5-year ARM rose to 6.05% last week from 6.02% in the prior week. It was the highest rate since the third week of November.

The average loan size fell 0.6% (+0.3% y/y) to $376,100 in the week of February 24, from $378,400 in the prior week. The series high of $401,900 was reached in the week ended May 6. The average size of a purchase loan fell 0.8% (-5.7% y/y) to $428,400 last week from $431,900 in the week prior. The average loan size to refinance a mortgage declined 1.2% (-10.5% y/y) to $263,900 from $267,200. It was the lowest level in six weeks.

The Mortgage Bankers 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.