Application activity picks up after Memorial Day weekend despite uptick in rates
The mortgage market index quickly recovered after nosediving to its lowest level in 22 years, according to the Mortgage Bankers Association.
Mortgage applications increased 6.6% on a seasonally adjusted basis and up 17% when unadjusted, data from MBA’s weekly survey showed. Joel Kan, AVP of economic and industry forecasting at the MBA, attributed the unusual upturn to the Memorial Day holiday.
“Mortgage rates increased for all loan types, with the 30-year fixed rate last week jumping 25 basis points to 5.65% – the highest level since 2008,” he said. “Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace.”
“Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29% below pre-holiday levels,” Kan added.
The refinance index was up by 4%, and the purchase index was 8% higher than the week prior. However, with mortgage rates well above 5%, Kan noted that refi activity is still 76% lower than a year ago, accounting for 31.7% of total applications.
“Purchase applications were down more than 15% compared to last year, as ongoing inventory shortages and affordability challenges have cooled demand, coinciding with the rapid jump in mortgage rates,” said Kan.
Read next: ARMs of mass destruction?
Meanwhile, adjustable-rate mortgages (ARMs), which have become increasingly popular in recent months, now account for 8.1% of total applications, down one basis point from the week earlier.
