US Mortgage Applications Slide 11% After Federal Reserve Raised Rates 50bps

The Mortgage Bankers Association showed mortgage applications in the US fell -11.0% after rising +2.0% last week. The Federal Reserve raised rates 50bps that week. The 30-year mortgage rate has been rising with yields with higher house prices in general. The purchase index slumped to its weakest level since May 2020 and the refinancing index to its lowest since January 2019. 

mortgage applicaition

Mortgage Bankers Association for the week ending 13 May 2022

  • US MBA mortgage applications w.e. 13 May -11.0% vs +2.0% prior
  • Market index 319.4 vs 358.9 prior
  • Purchase index 225.0 vs 255.4 prior
  • Refinancing index 826.9 vs 913.6 prior
  • 30-year mortgage rate 5.49% vs 5.53% prior
US MBA Mortgage Applications

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%. 

  • Freddie Mac 30-year fixed mortgage rates rose another 11 bps to 5.11%, the high back to December 2009 (up 214bps y-o-y).
  • Fifteen-year rates surged 21 bps to 4.38% – the high since April 2010 (up 209bps).
  • Five-year hybrid ARM rates gained six bps to 3.75% (up 92bps).
  • Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up 22 bps to a more than decade-high 5.23% (up 216bps).

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.

source: Mortgage Bankers Association of America

From The TradersCommunity News Desk