As if observers needed more evidence that the housing market is experiencing a steep contraction, the Mortgage Bankers Association (MBA) reported that the week ending August 12, 2022 saw the lowest level of loan applications in 22 years.
Data from the MBA’s Weekly Mortgage Applications Survey and Market Composite Index revealed that applications during the week dipped 2.3% from the week prior on a seasonally adjusted annual basis.
“Mortgage application activity was lower last week, with overall applications declining over 2% to their lowest level since 2000,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Home-purchase applications continued to be held down by rapidly drying-up demand as high mortgage rates, challenging affordability and a gloomier outlook of the economy kept buyers on the sidelines.”
The MBA’s index that tracks applications for purchase mortgages, unadjusted for seasonality, declined by 2% from the previous week and was down 18% from the same week in 2021. Purchase activity has now fallen in six of the past seven weeks.
Meanwhile, the organization’s refinance index fell 5% weekly and a staggering 82% annually as rising interest rates continue to hold back refi movement. The refi index also is now at its lowest level since 2000, precipitated by a 6% weekly decline in applications for conventional refinances.
Kan noted that market cooling could open the door for a purchase rebound before 2022 is over.
“If home-price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year,” he said. “The 30-year fixed rate stayed more than 2 percentage points higher than a year ago at 5.45%, but was down over 50 basis points from the June 2022 high of 5.98%, providing some relief for buyers in the market.”