As rates breach 4 percent for the first time since 2019, requests to refinance are down more than 50 percent from a year ago.

Homebuyers seem to be taking rising mortgage rates in stride for now, but requests to refinance are down more than 50 percent from a year ago, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

Although rates on 30-year fixed-rate loans breached the 4 percent threshold last week, applications for purchase loans were down only 1 percent from the week before, after adjusting for seasonal factors. Looking back a year, purchase loan applications were down 7 percent.

Requests to refinance existing mortgages, however, were down 9 percent week-over-week, and 54 percent from a year ago.

Joel Kan

“Mortgage rates increased across the board last week following the recent rise in Treasury yields, which have moved higher due to unrelenting inflationary pressures and increased market expectations of more aggressive policy moves by the Federal Reserve,” said MBA forecaster Joel Kan, in a statement. “The 30-year fixed rate saw the largest single-week increase since March 2020 and was above the 4 percent mark for the first time since 2019.”

Most of the modest decline in purchase applications was attributable to a drop in requests for FHA, VA, and USDA loans, Kan said.

“Prospective buyers still face elevated sales prices in addition to higher mortgage rates,” Kan said. The heavier mix of applications for conventional loans contributed to another record average loan size of $453,000.

With rates headed up, requests to refinance accounted for 52.8 percent of total applications, down from 56.2 percent the week before. Adjustable-rate mortgages (ARMs) accounted for 5 percent of total applications, up from 4.5 percent the previous week.

The MBA reported average rates for the following types of loans during the week ending Feb. 11:

  • For 30-year fixed-rate conforming mortgages (loan balances of $647,200 or less), rates averaged 4.05 percent, up from 3.83 percent the week before. With points increasing to 0.45 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased from last week.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $647,200) averaged 3.81 percent, up from 3.62 percent the week before. With points increasing to 0.39 from 0.35 (including the origination fee) for 80 percent LTV loans, the effective rate also increased from last week.
  • For 30-year fixed-rate FHA mortgages, rates averaged 4.01 percent, up from 3.93 percent the week before. With points increasing to 0.59 from 0.54 (including the origination fee) for 80 percent LTV loans, the effective rate also increased from last week.
  • Rates for 15-year fixed-rate mortgages averaged 3.37 percent, up from 3.16 percent the week before. With points increasing to 0.50 from 0.47 (including the origination fee) for 80 percent LTV loans, the effective rate increased from last week.
  • For 5/1 adjustable rate mortgages (ARMs), rates averaged 3.36 percent, up from 3.13 percent the week before. With points increasing to 0.48 from 0.35 (including the origination fee) for 80 percent LTV loans, the effective rate also increased from last week.

In a separate report, the MBA said credit availability declined in January to its lowest level since August 2021. The supply of conforming mortgage credit dropped to levels not seen since 2013, thanks to decreased investor demand for loan programs catering to borrowers with higher LTVs and lower credit score profiles.

Before January, Kan said, there had been six months of increasing jumbo credit supply, driven by strong demand, rapid appreciation of home prices, and the overall strength in the economy.

“That growth streak ended last month, as investors reduced their willingness to purchase jumbo loans and also raised credit requirements,” Kan said.

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Email Matt Carter

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