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Mortgage Apps: Sharp Decline As Rates Near 4.75%

March 23, 2022
Bottom Line:  Mortgage rates jumped last week and pushed above 4.75% this week in the case of many 30-year mortgages. Applications for refinancing tumbled to the lowest levels since the pandemic but remained modestly above the lows seen in 2019. Purchase applications had shown resilience to higher rates, rebounding earlier this month after losing steam in the first two months of the year. But that rebound has now lost momentum again. For now, purchase activity is running near late 2019 levels and still well above the lows of 2018. Overall, higher mortgage rates are weighing on mortgage activity as expected, but purchase volumes are proving somewhat resilient amid tight housing supply. Finally, it is important to note that mortgage spreads to Treasuries have stabilized at wider levels, suggesting the sharp acceleration higher in mortgage rates might be losing momentum.
The MBA Mortgage Application Index FELL sharply, DOWN -8.1% to 456.0, BELOW the 13-week average of 539.0 and -38.9% BELOW the year-ago level. Non-seasonally adjusted the index FELL -7.5%.
The Purchase Index FELL -1.5% to 265.0, BELOW the 13-week average of 281.0 and -12.1% BELOW the year-ago level.
The Refinancing Index FELL sharply , DOWN -14.4% to 1523.0, BELOW the 13-week average of 2031.0 and -54.2% BELOW the year-ago level.
The effective (adjusted for points paid) 30-year mortgage rate ROSE sharply, UP 26bps to 4.68%, ABOVE the 13-week average of 4.0% and 34bps ABOVE the year-ago level.
Article by Contingent Macro Advisors