"There are not many borrowers left who have an incentive to refinance"
Mortgage loan applications tumbled by 7.1% from a week ago as mortgage rates surged for the fifth straight week.
“All mortgage rates in MBA’s survey continued to climb, with the 30-year fixed rate rising for the fifth consecutive week to its highest level since March 2020. The 30-year fixed-rate is now 77 basis points higher than it was a year ago,” said Joel Kan, associate vice president of economic and industry forecasting at MBA.
Unsurprisingly, MBA’s refinance index plummeted 13% week over week and 53% year over year. The refinance share of mortgage activity was down from 60.3% to 55.8% of total applications.
“Borrower demand for refinances subsided, with applications falling for the fourth straight week,” Kan said. “After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance. Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them.”
Purchase applications also dropped on a seasonally adjusted basis, down by 2% from the previous week. Unadjusted, it increased 5% week over week.
“The decline in purchase activity was led by a 5% drop in government applications, compared to a modest less than 1% decline in conventional applications,” Kan added. “The relative weakness in government purchase activity continues to contribute to higher loan sizes. The average purchase loan size was $433,500, eclipsing the previous record of $418,500 set two weeks ago.”