Total mortgage demand saw an 8.1% drop week-over-week thanks to a big drop in refinance demand, according to the latest Mortgage Bankers Association’s weekly survey…(MBA)
- REFI: The Refinance Index saw a 14% drop week-over-week and were down a whopping 54% year-over-year.
- PURCHASES: The Purchases Index was only down 2% for the week but was down 12% year-over-year.
NOTE: After the big drop the refinance share of mortgage activity has now fallen to 44.8% of total applications. Refis peaked for the week ending March 6th when they hit 76.5% of mortgage activity.
Rates continue to rise as inflation data continues to worry markets for the week ending March 18th, 2022…
- 30-YR FIXED: The average contract interest rate was up 9 basis points to 4.11%, this is 75 basis points higher than one year ago.
- 15-YR FIXED: The average contract interest rate saw a huge jump of 21 basis points to 3.76%, this is 104 basis points higher than one year ago.
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, says those who are hardest hit by price and rate hikes are first-time homebuyers…
- “Purchase application volume was down slightly for the week, with a larger drop in FHA and VA purchase volume, and a small decline in conventional purchase loans. First-time homebuyers, who rely on these government programs, are increasingly challenged by both the rapid increase in home prices and higher mortgage rates. Repeat homebuyers, who are more likely to use conventional loans, benefit from the gains in home equity realized on a sale which can be used to fuel their next purchase, even with rates moving higher.”
As we discussed yesterday, Ian Shepherdson at Patheon Macroeconomics argued that a continued decline in mortgage demand is a sign that a housing slowdown upon us. I don’t think he is wrong, but a huge reason for the decline in mortgage demand, so far, is refis. Purchases are down 12%, which is not a minuscule number, but it is also not big enough to put a dent in the current craziness. This doesn’t mean it won’t happen but I am curious to know how big of a decline in purchase activity will be needed before it is noticeable on the demand side of the equation.
