US Mortgage Applications Fall to 22 Year Low with Affordability Challenges

The Mortgage Bankers Association showed mortgage applications in the US dropped in the week ended July 15 to the lowest since February 2000, falling for a third week to a more than two-year low. Separate data Wednesday showed existing-home sales fell for a fifth month in June to a two-year low. The purchase index is now 19% lower than the same week a year ago as homeowners still have reduced incentive ahead of more Fed rate rises. Borrowers face an ongoing affordability challenge and a low inventory problem.  

mortgage applicaition

The average long-term mortgage rate fell 10 basis points last week and have declined 24 basis points in the last two weeks to 5.74% as it corrects from the highest rate since November 2008. The 30-year mortgage rate has been rising with yields with higher house prices in general.

Mortgage Bankers Association for the week ending 15 July 2022

  • Mortgage applications w.e. 15 July -6.3% vs -1.7% prior
  • Market index 281.1 vs 300.0 prior
  • Purchase index 208.0 vs 224.3 prior
  • Refinancing index 655.7 vs 685.3 prior
  • 30-year mortgage rate 5.82% vs 5.74% prior
US MBA Mortgage Applications
  • After falling 40 bps two weeks ago to 5.30%, purchase mortgage rates climbed back last week to 5.5%, according to the latest Freddie Mac PMMS.
  • A year ago at this time, 30-year fixed-rate purchase rates were at 2.88%.
  • The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) rose to 5.82%, from the previous week’s 5.74%.
  • Jumbo mortgage loans (greater than $647,200) also increased to 5.31% from 5.25%.

“Mortgage applications declined for the third week in a row, reaching the lowest level since 2000,” Joel Kan, associate vice president of economic and industry forecasting at MBA. “The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”

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.

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.


  • The Federal Housing Administration‘s (FHA) share of total applications rose to 12.4% from the previous week’s 11.7%.
  • The United States Department of Agriculture‘s (USDA) share also increased to 0.6% from the week prior’s 0.5%.
  • The Veterans Affairs‘ (VA) share of total applications fell to 10.6% from 11.2%.

In 2007, just before the housing market crash, there were 13.1 million ARMs, representing 36% of all mortgages.

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

From The TradersCommunity News Desk