Mortgage applications dropped 13.1% on a seasonally adjusted basis during the week ended Feb. 18, hitting a two-year low, as 30-year mortgage rates topped 4%, the Mortgage Bankers Association said, citing its Market Composite Index.
The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 4.09% from 4.01%, and the rate for conforming 30-year mortgages of $647,200 or less rose to 4.06% from 4.05%.
The average contract interest rate for 30-year fixed- mortgages with jumbo loan balances of more than $647,200 increased to 3.84% from 3.81%, and the average contract interest rate for a 15-year fixed-rate mortgage rose to 3.42% from 3.37%.
On an unadjusted basis, the market composite index, which measures mortgage-loan application volume, declined 11%. The refinance index, meanwhile, slid 16% from the previous week and was down 56% from the same week a year ago. The refinance share of mortgage activity decreased to 50.1% of total applications from 52.8% the previous week.
The seasonally adjusted purchase index fell 10% from the previous week, while the unadjusted purchase index dipped 6% and was 6% lower than one year ago.
“Mortgage applications dropped to their lowest level since December 2019 last week, as mortgage rates continued to inch higher,” MBA associate vice president of economic and industry forecasting Joel Kan said in a press release. “Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022.”
The adjustable-rate mortgage share of activity rose to 5.1% of total applications. The FHA share of total applications increased to 8.7% from 8.3% in the preceding week, while the VA share of applications rose to 9.9% from 9.3%. The USDA share of applications was flat at 0.4%.
“Purchase applications, already constrained by elevated sales prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week,” Kan noted. “While the average loan size did not increase this week, it remained close to the survey’s record high.”