Mortgage application volume surged 12 percent two weeks ago but gave back a large chunk of that gain during the week ended February 4. last week. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of that volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier and lost 6 percent on an unadjusted basis.

The Refinance Index decreased 7 percent from the previous week and was 52 percent lower than the same week one year ago. The refinance share of mortgage activity dipped to 56.2 percent of total applications from 57.3 percent the previous week.

The seasonally adjusted Purchase Index fell 10 percent from one week earlier and was down 3 percent before adjustment. Applications were 12 percent lower than the same week in 2021.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83 percent. Mortgage rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies. With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease.  

“Purchase activity slowed after the previous week's gain,” Kan said. “Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10 percent. The average loan size again hit another record high at $446,000. Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.”  

The FHA share of total applications increased to 8.0 percent from 7.7 percent the week prior and the VA share grew to 10.0 percent from 9.1 percent. The USDA share was 0.4 percent, the same as the previous week. The origination balance of loans increased to $366.200 from $365,300 and the purchase mortgage size, $446,900, was the fourth new high in as many weeks. The previous week’s high was $441,100.  

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances at or below the conforming limit of $647,200 increased to 3.83 percent from 3.78 percent, with points decreasing to 0.40 from 0.41. The effective rate increased to 3.95 percent.   

The rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, was 3.62 percent, up from 3.59 percent. Points rose to 0.35 from 0.31 and the effective rate to 3.72 percent.

Thirty-year FRM backed by the FHA had an average rate of 3.93 percent with 0.54 point. The prior week the average was 3.86 percent, with 0.55 point. The effective rate increased to 4.09 percent.

The rate for 15-year FRM increased from 3.01 percent to 3.16 percent and points rose to 0.47 from 0.41.  The effective rate was 3.28 percent.

The rate for 5/1 adjustable-rate mortgages (ARMs) rose 4 basis points to 3.13 percent and points were unchanged from the prior week at 0.35. The effective rate grew to 3.26 percent. The ARM share of activity was unchanged at 4.5 percent of total applications.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.