U.S. Mortgage Applications Plunge as Interest Rates Surge
by:Tom Moeller
|in:Economy in Brief
Summary
- Purchase loan applications decline for fourth consecutive week.
- 30-year fixed-rate mortgage increases to early-December high.
- Applications for loan refinancing fall sharply.
Mortgage applications declined 10.6% (-8.9% y/y) in the week ended February 16, after falling 3.3% in the prior week. The level of applications was the lowest since the last week of December. Applications for loans to purchase a home fell 10.1% (-13.0% y/y) last week after weakening 3.2%. Applications to refinance a loan fell 11.4% (+0.1% y/y) last week after falling 3.6% in the second week of the month. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
The effective interest rate on a 30-year fixed-rate loan rose to 7.25% last week from 7.06% in the second week of this month. It was the highest level since the first week of December. It remained below the 8.12% high in mid-October of last year. The rate on 15-year fixed-rate mortgages rose to 6.81% in the latest week from 6.77% in the prior week. The rate on 30-year Jumbo loans increased to 7.29% last week from 7.12% while the rate on the 5-year ARM rose to 6.63% from 6.52%. It was increased from a 5.56% low in the last week of May.
The share of applications for refinancing an existing loan fell to 32.6% in the week ended February 16 from 34.0% in the prior week. The percentage of applications that were ARMs rose to 7.4% last week from 7.0% in the prior week.
The average loan size eased 0.7% (+0.2% y/y) to $379,000 in the week ended February 16, after rising to $381,800 in the prior week. The average size of a purchase loan slipped 0.3% (+2.6% y/y) to $439,400 in the latest week after rising to $440,700 in the prior week. The average loan size to refinance a mortgage declined 5.0% (-2.0% y/y) to $254,000 in the latest week after falling to $267,300 in the prior week.
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.
The minutes to the latest FOMC meeting can be found here
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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