Mortgage application volume last week posted the sharpest drop in recent years as interest rates continued higher, the Mortgage Bankers Association reported today.
The group’s market composite index, a measure of home loan application volume, tumbled 19.5 percent on a seasonally adjusted basis from the first week of December. The last double-digit losses for the index were seen in December 2006 (down 14.3 percent) and June 2005 (down 11.3 percent.)
MBA reported that the index that tracks refinancings tumbled 27.3 percent last week from just one week earlier, while the purchase-loan index fell 10.6 percent.
As a result, the refinance share of applications fell to 53.2 percent last week from 57.6 percent one week earlier, while the adjustable-rate mortgage (ARM) share actually rose during the period from 9.4 percent to 9.9 percent.
Borrowing costs were up considerably for the second straight week, as the average contract interest rate for 30-year fixed-rate mortgages gained from 6.07 percent to 6.18 percent, the average 15-year fixed climbed from 5.72 percent to 5.78 percent, and the average one-year ARM rate was up to 6.48 percent from 6.31 percent in the previous week.
Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.12 on the 30-year loans, 1.1 on the 15-year, and 0.95 on one-year ARMs — compared with 1.17, 1.01 and 0.97, respectively, in the previous week. These points include the origination fee and are based on loan-to-value ratios of 80 percent.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.