Individuals across the country put the American dream of homeownership on standby for the week ending May 13, reducing mortgage application volume by 11% compared to the prior week, as measured by the Mortgage Bankers Association‘s (MBA’s) Market Composite Index.
“Mortgage applications decreased for the first time in three weeks, as mortgage rates — despite declining last week — remained over two percentage points higher than a year ago and close to the highest levels since 2009,” Joel Kan, associate vice president of economic and industry forecasting at MBA, said in a statement.
The decline was propelled primarily by purchase-application activity. Refinance applications decreased 9.5% from the prior week, but the seasonally adjusted purchase index dropped even more, 12% in the same period, as higher rates and worsening affordability conditions have put off potential homebuyers.
Compared to a year ago, overall applications declined 55.8%. Interest in purchases fell 15.2%, while refinances dropped 75.8% from the prior period.
The results are consistent with MBA’s May forecast released on Monday, which shows far fewer home sales and mortgage originations in 2022 than a year ago. Total originations are expected to be at $2.5 trillion this year, compared to $3.9 trillion last year. Meanwhile, the MBA expects 5.934 million home sales in 2022, compared to 6.127 million in 2021.
“General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search,” Kan said.
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According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.49% this week, down from 5.53% in the previous week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo-loan balances (greater than $647,200) fell to 5.03%, down from 5.08% the prior week.
The refinance share of all applications rose to 33%, up from 32.4% the previous week. The MBA report also noted that the adjustable-rate mortgage share decreased to 10.3% of total applications. The FHA share of total applications increased to 11.1% from 10.5% a week earlier. In addition, the share of VA applications remained unchanged at 10.5%. The USDA share also held steady, at 0.5%.
The survey, conducted since 1990, covers over 75% of the retail residential mortgage applications.