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.
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.