U.S. Mortgage Applications Decline as Interest Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Purchase applications fall sharply; refinancing applications ease.
- Mortgage interest rate on 30-year loan jumps.
Mortgage applications declined 13.3% (-57.2% y/y) in the week ended February 17 following a 7.7% fall during the prior week. The decline brought them to the lowest level since the first week of January, down 21.7% during the last four weeks. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
Applications for home purchase loans plunged 18.1% (-41.3% y/y) in the latest week following a 5.5% decline in the week prior. Applications to refinance an existing loan fell 2.2% (-72.0% y/y) following a 12.5% decline in the prior week.
The percentage of applications for refinancing an existing loan rose to 32.5% in the week ended February 17, up from 26.1% at the end of November. The percentage of ARM loans rose to 7.6% but remained 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 w/w to 6.84% from 6.36% two 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 6.22% last week from 6.06% in the prior week and 5.80% one week earlier. The rate on 30-year Jumbo loans increased to 6.59% from 6.38%. The rate on a 5-year ARM rose to 6.02% from 5.80% in the prior week. It was the highest rate since the third week of November.
The average loan size fell 1.1% (+1.6% y/y) to $378,400 in the week ended February 17 from $382,500 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 to $431,900 (-4.1% y/y) from $433,300 in the week prior. The average loan size to refinance a mortgage declined to $267,200 (-9.3% y/y) from $274,300. It was the lowest level in five 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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