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M R EP O RT | 37 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Refis Drop to Just 50% of Overall App Volume A rise in rates is putting the brakes on the refi market, as overall app volume continues its downward turn. T he trend of rising rates continues to push down mortgage ap- plication volume, as the latest Weekly Mortgage Applica- tions Survey from the Mortgage Bankers Association (MBA) has found that mortgage application volume decreased 13.1% over the previous week (for the week ending February 18, 2022). The MBA's Refinance Index decreased 16% from the previous wee, and was 56% lower than the same week just one year ago. The seasonally adjusted Purchase Index decreased 10% from one week earlier. The unadjusted Purchase Index decreased 6% compared to the previous week and was 6% lower than the same week one year ago. "Mortgage applications dropped to their lowest level since December 2019 last week, as mort- gage rates continued to inch high- er," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "The 30-year fixed rate was 4.06%, almost a full per- centage point higher than a year ago. Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022. Conventional refinances in particular saw a 17% decrease last week." The refinance share of mortgage activity decreased to 50.1% of total applications, down from 52.8% of overall apps the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.1% of total applications. "Purchase applications, already constrained by elevated sales pric- es and tight inventory, have also been impacted by these higher rates and declined for the third straight week," Kan said. "While the average loan size did not in- crease this week, it remained close to the survey's record high." By loan type, the FHA share of total applications increased to 8.7% from 8.3% the week prior, while the VA share of total apps increased to 9.9% from 9.3% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior. The latest Federal Housing Finance Agency House Price Index (FHFA), found that U.S. home prices rose 17.5% from Q 4 of 2020 to Q 4 of 2021, up 3.3% compared to Q 3 of 2021. FHFA's seasonally adjusted monthly index for December was up 1.2% from November. The spike in prices continues to be sparked by the nationwide shortage in homes and listings, as the few homes available are selling at a rapid clip, as Redfin recently reported that homebuy- ers are faced to contend with the fastest market on record during the four weeks ending February 13, as a record 57% of homes that went under contract sold within two weeks of being listed. Redfin also reported that asking prices jumped 16% year over year to a new high. Mortgage rates also climbed to their highest level since May 2019, nearing $2,000. New listings fell 8%, sending overall supply to a record low.