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The Market Composite Index, a measure of mortgage loan application volume, increased 2.3% on a seasonally adjusted basis during the week ending January 14, 2022, compared with the previous week. On an unadjusted basis, the Index increased 3%, according to the Mortgage Bankers Association (MBA).

The Refinance Index, on the other hand, decreased 3% from the previous week and was 49% lower than the same week one year ago.

The seasonally adjusted Purchase Index increased 8% from one week earlier. The unadjusted Purchase Index increased 14% compared with the previous week and was 13% lower than the same week one year ago.

The Takeaway:

“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. The 30-year fixed rate reached 3.64 percent and has increased more than 30 basis points over the past two weeks. FHA and VA refinance declines drove most of the refinance slowdown,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a statement.

“Despite the increase in rates, purchase applications jumped almost 8 percent, with conventional purchase applications accounting for much of the stronger activity. The average loan size for a purchase application set a record at $418,500. The continued rise in purchase loan application sizes is driven by high home price appreciation and the lack of housing inventory on the market—especially for entry-level homes. The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.”

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