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Mortgage Apps: Rates Near '21 Highs, Housing Trend Shift?

January 5, 2022
Bottom Line:    Mortgage applications were lower in the year's final week. While seasonal adjustments are always tricky in the last two weeks of December, a potential trend shift was developing in December that bears watching as 2022 takes shape. Since September, applications for mortgage purchases had been resuming an uptrend after cooling following the initial shock of higher mortgage rates in the 1st Quarter of '21. But as mortgage rates rose again in December, closing the month near 3.50%, purchase volumes started to slow. Of course, refi volumes had already been in a significant downtrend and continued lower. Finally, spreads are pushing wider in the secondary market as the secondary mortgage rate marches higher. We are keeping a close eye on this as there are early hints that housing might be slowing -- but a change in the housing trend is not yet definitive.
The MBA Mortgage Application Index FELL -5.6% to 573.0, BELOW the 13-week average of 625.0 and -30.8% BELOW the year-ago level. Non-seasonally adjusted the index FELL -4.8%.
The Purchase Index FELL sharply , DOWN -10.2% to 277.0, BELOW the 13-week average of 287.0 and -11.6% BELOW the year-ago level.
The Refinancing Index FELL -2.5% to 2351.0, BELOW the 13-week average of 2601.0 and -40.0% BELOW the year-ago level.
The effective (adjusted for points paid) 30-year mortgage rate ROSE 5bps to 3.47%, ABOVE the 13-week average of 3.37% and 17bps ABOVE the year-ago level.