U.S. mortgage applications tumble last week - MBA

[mahatmakanejeeves]

Reuters

U.S. mortgage applications tumble last week - MBA

Wed, February 23, 2022, 9:08 AM

WASHINGTON (Reuters) - U.S. mortgage applications plunged to their lowest level in more than two years last week as rising mortgage rates dampened demand for loans to purchase homes and refinancing activity, a survey showed on Wednesday.

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, tumbled 13.1% on a seasonally adjusted basis to 466.4 from the prior week. That was the lowest level since December 2019.

The refinance index dropped 15.6%, while the purchase index declined 10.1%. The 30-year fixed mortgage rate averaged 4.06%, up from 4.05% in the prior week, according to the MBA.

Mortgage rates have been rising, with the Federal Reserve poised to start raising interest rates in March to tame high inflation. Economists expect as many as seven rate hikes from the U.S. central bank this year.

{snip}

[progree]

1. Coupled with a 18% increase in house prices, that comes to a 33.5% higher P&I payment

Last edited Wed Feb 23, 2022, 01:51 PM - Edit history (1)

compared to a year ago --

https://finance.yahoo.com/news/stock-market-news-live-updates-february-23-2022-231403641.html

The 30-year fixed rate was 4.06%, almost a full percentage point higher than a year ago

So on a $300,000 home, a 4.06% rate would come to a $1,443/month P&I payment

While a 3.06% rate would come to $1,275 month

So a $168/month increase, which is a 13.2% increase in the P&I payment

Though it says "almost a full percentage point" so it isn't quite that much. Yet.

Edited to add

Now if the average house went up by 18% over the past year, based on the Case Shiller National index (it was actually 18.8%)),

the P&I payment would increase by another 18%: 1,443 * 1.18 = $1,703

for a total of $428 more per month, an increase of 33.5% over the $1,275/mo payment.

That qualifies as jumping and soaring. It is scary.

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Also from the link above in news related to higher mortgage rates:

Refinances fell by 16% over last week, and by a marked 56% compared to the same week last year.

Purchases, meanwhile, fell 10% on a week-on-week basis, when adjusted for seasonality. Compared to the same period last year, purchases were down by 6%, not seasonally adjusted.