“With mortgage rates increasing last week to the highest level since 2009, applications continued to decline. Overall application activity fell to the lowest level since 2018, with both purchase and refinance applications posting declines,” said Joel Kan, AVP of economic and industry forecasting at MBA.
The refi index posted a 9% week-over-week decrease, and the purchase index saw an 8% slump from a week ago. As a result, the refinance share of mortgage activity dwindled from 35.7% to 35% of total applications.
“Refinance applications were 70% below the same week a year ago, when the 30-year fixed rate was in the 3% range,” Kan said. “The drop in purchase applications was evident across all loan types. Prospective home buyers have pulled back this spring as they continue to face limited options of homes for sale along with higher costs from increasing mortgage rates and prices. The recent decrease in purchase applications is an indication of potential weakness in home sales in the coming months.”
Meanwhile, the adjustable-rate mortgage share of activity grew to 9.3% of total applications. FHA loans accounted for 10.6% of total applications, up from 9.9% the week prior, and the share of VA loans increased one basis point to 10.2%. The USDA share of total applications stayed unchanged at 0.5%.
“In a period of high home-price growth and rapidly increasing mortgage rates, borrowers continued to mitigate higher monthly payments by applying for ARM loans,” Kan said. “The ARM share of applications last week was over 9% by loan count and 17% based on dollar volume. At 9%, the ARM share was double what it was three months ago, which also coincides with the 1.5 percentage point increase in the 30-year fixed rate.”