Average 30-Year Fixed Mortgage Rate Above 6% for First-Time Since 2008

The average 30-year fixed mortgage rate stood above 6% for the first-time since 2008 last week, according to the Mortgage Bankers Association, rising to 6.01% last week from 5.94% the previous week, essentially double what it was a year ago. Rates rose sharply after the higher-than-expected CPI and in front of the next FOMC expecting to rise another 75 bps.

The Mortgage Bankers Association showed mortgage applications in the US dropped in the week showed a 1.2% decline following the prior week’s 0.8% decrease, to the lowest since 2018. Higher mortgage rates have pushed refinance activity down more than 80 percent from last year.

mortgage applicaition

Mortgage Bankers Association for week ending 9 September 2022

  • MBA mortgage applications -1.2% vs -0.8% prior
  • Market index 255.0 vs 258.1 prior
  • Purchase index 198.1 vs 197.8 prior
  • Refinancing index 532.9 vs 556.4 prior
  • 30-year fixed-rate mortgages average 6.01% from 5.94% prior
  • 15-year fixed-rate mortgages average 5.30% from 5.23%
  • Average contract interest rate for 5/1 ARMs 4.83% from 4.81
  • Refinance share of mortgage activity decreased to 30.2% of total applications from 30.7% the previous week.
  • Adjustable-rate mortgage (ARM) share of activity increased to 9.1% of total applications.

“The 30-year fixed mortgage rate hit the six percent mark for the first time since 2008 – rising to 6.01 percent – which is essentially double what it was a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Higher mortgage rates have pushed refinance activity down more than 80 percent from last year and have contributed to more homebuyers staying on the sidelines. Government loans, which tend to be favored by first-time buyers, bucked this trend and increased over the week, driven mainly by VA and USDA lending activity.”

  • The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week.
  • The Refinance Index decreased 4 percent from the previous week and was 83 percent lower than the same week one year ago.
  • The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 29 percent lower than the same week one year ago.

The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The widespread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.” Joel Khan

ARMS

  • The Federal Housing Administration (FHA) share of total applications rose to 13.4% from the previous week’s 13.3%.
  • The United States Department of Agriculture (USDA) share also increased to 0.7% from the week prior’s 0.6%.
  • The Veterans Affairs (VA) share of total applications fell to 11.3% from 10.8%.

Things are different to the 2008 bubble pop however, total mortgage debt in the United States is now less than 43% of current home values, the lowest on record. Negative equity is virtually nonexistent, compare that to the more than 1 in 4 borrowers who were under water in 2011. Just 2.5% of borrowers have less than 10% equity in their homes.

In 2007, just before the housing market crash, there were 13.1 million ARMs, representing 36% of all mortgages, this week it was 9.1%

This year’s surge in mortgage rates was hardly unforeseen, given the record lows reached in the pandemic period and concerns about high U.S. inflation readings, but it has unfolded faster than many expected. At the beginning of the year, the average rate on America’s most popular home loan was 3.22%. 

A 22yr low in MBA refinancings as a % of total Mortgage applications

Higher mortgage rates typically slow home-buying activity, but the number of applications. Expectations that the Federal Reserve will raise interest rates several more times this year to control inflation are driving up mortgage rates. Home prices continue to push homeownership out of the question for many Americans.

Rising rates are reducing home-loan refinancings, which powered much of the mortgage market’s boom in 2020 and 2021. About four million refinancings were expected to make up 33% of mortgage originations this year, down from 59% in 2021, according to the Mortgage Bankers Association.


The survey covers over 75 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100. 

Source: Mortgage Bankers Association of America

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