Mortgage Applications Down for the Holidays

Mortgage applications decreased 2.7% from two weeks earlier for the week ending Dec. 31, 2021. According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, the Market Composite Index, which measures the mortgage loan application volume, decreased 2.7% on a seasonally adjusted basis from two weeks earlier.

Key findings:

- Unadjusted, the index decreased 32% compared with two weeks ago.
- The holiday adjusted refinance Index decreased 2% from two weeks ago—40% lower YoY.
- The seasonally adjusted Purchase Index decreased 4% from two weeks earlier.
- The unadjusted Purchase Index decreased 32% compared with two weeks ago—12% lower YoY.
- The refinance share of mortgage activity increased to 65.4% of total applications.
- The adjustable-rate mortgage (ARM) share of activity decreased to 3.3% of total applications.
- The FHA share of total applications increased to 9.2%.
- The VA share of total applications decreased to 11.3%.
- The USDA share of total applications remained unchanged from 0.4% the week prior.

The takeaway:

“Mortgage rates continued to creep higher over the past two weeks, as markets maintained an optimistic view of the economy. The 30-year fixed rate increased 6 basis points to 3.33%—the highest since April 2021. The higher rates to close 2021 caused refinance activity to decrease 2.2%. Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021—when mortgage rates were around 40 basis points lower,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, in a statement. “The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021. Even though average loan sizes were lower, home-price appreciation remains at very high levels.”

“Despite supply and affordability challenges, 2021 was a record year for purchase originations. MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion," added Kan.