Have you heard? Recent report shows Interest Rates Up 5%, Mortgage Applications Down.


MBA Weekly Applications Survey April 6, 2022: As Rates Push 5%, Applications Drop Again

For the third week in a row, mortgage interest rates have crept closer to 5%, taking a toll on mortgage applications, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending April 1.

The application Index declined 6.3 percent from the previous week. The refinance share of mortgage activity decreased to 38.8 percent of total applications from 40.6 percent the last week. The Purchase Index fell by 3% from the previous week. 

Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019.”

Report: Home Buyer Demand Shows Signs Of Slowing

This spring, some buyers are sitting on the fence, as seen by a drop in mortgage applications, online searches, and home tours. According to the Mortgage Bankers Association, mortgage applications for purchases rather than refinances declined 10% on March 25 compared to the same week in 2021, marking the second week in a row of double-digit declines in buy applications as per Redfin.

According to Redfin’s study, at the current average mortgage rate of 4.67 percent, the monthly principal and interest payment at the median asking price jumped to $2,234 per month. The monthly payment increased by 31% from a year ago when interest rates were 3.18 percent. Moreover, the average monthly price for a new mortgage has increased by $537 since 2022. 

As reported by Realtor.com, the median listing price increased to $405,000 in March, 13.5 percent over March 2021. They predict that decreasing demand and construction of newly built houses at a 16-year high is expected to relieve the strain on inventory by June or July, potentially slowing price growth.

Black Knight: Annual Price Growth at Record High

According to Black Knight of Jacksonville, Fla., home prices jumped 1.84 percent in February, about four times the 25-year average, marking the 14th month of the pandemic with monthly growth exceeding 1%. Annual price growth was 19.6% year over year, a new high for the Black Knight Mortgage Monitor Report. Also, the average home has gained more than 34% since February 2020, with appreciation resuming after a temporary pause last fall.

In contrast, the research claims that affordability has reached its lowest position since 2004-2007, with the average monthly principal and interest payment for a house purchase up to $329 (24 percent) year-to-date. To make that P&I payment, it now needs 29.1 percent of median household income, up from 19.3 percent just 15 months ago and four percentage points more than the long-term average of 1995-2003. According to the analysis, 82 of the 100 largest US markets are now less inexpensive than their long-term averages, up from six at the outbreak’s inception.

Next week’s potential market-moving reports are:

  • Monday, April 8th – NY Fed Median 1-Year Expected Inflation
  • Tuesday, April 9thConsumer Price Index, Core CPI (Monthly), Federal Budget Deficit
  • Wednesday, April 10h – No Report
  • Thursday, April 11th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, April 12thIndustrial Production Index, Capacity Utilization

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.