U.S. Mortgage Applications Fall Sharply as Rates Rise
by:Sandy Batten
|in:Economy in Brief
Summary
- Total applications fell for first time in three weeks.
- Led by largest weekly drop in refinancing applications since late November.
- 30-year mortgage interest rate rose to highest since March 2020.
The Mortgage Bankers Association's Loan Applications Index fell 7.1% w/w (-39.2% y/y) in the week ended January 21, the first decline in three weeks, following a 2.3% w/w increase in the previous week. Purchase applications declined 1.8% w/w (-10.2% y/y) after a 7.9% weekly rise in the previous week. Applications for loans to refinance plummeted 12.6% w/w (-53.3% y/y), their fourth consecutive weekly decline, after having fallen 3.1% w/w in the previous week.
The share of applications for refinancing fell to 55.8% in the week ended January 21, the lowest since the week of December 27, 2019, from 60.3% in the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.4%, the highest since the week of March 20, 2020, from 3.8% in the prior week.
The effective interest rate on a 30-year mortgage rose for the fifth consecutive week to 3.85%, its highest since the week of March 20, 2020, from 3.77% in the previous week. The effective rate on a 15-year mortgage increased to 3.10% from 3.05% while the rate on a Jumbo 30-year mortgage slipped one basis points to 3.66% following an outsized jump in the previous week. The interest rate on a 5-year adjustable-rate mortgage posted another significant increase to 3.30% from 3.13% in the previous week. This was the highest 5-year ARM rates since the week of September 18, 2020.
Applications for fixed-rate loans fell 7.6% w/w (-40.6% y/y) in the week of January 21 after a 1.5% increase in the previous week. Applications for adjustable-rate mortgages rose 7.2% w/w (+20.2% y/y) in the most recent week on top of a 24.9% weekly jump in the previous week.
The average size of a mortgage loan increased 4.6% w/w (10.0% y/y) to $362,700 in the week ended January 21 from $346,800 in the previous week. The average size of a loan for purchase rose 3.6% w/w (+9.7% y/y) to a record $433,500 on top of a 4.2% jump in the previous week. The average size of a refinanced loan gained 2.4% w/w (+1.4% y/y) to $306,700 in the most recent week from $299,500 in the previous week.
This survey covers over 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 SURVEYW database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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