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Mortgage applications nosedive as rates continue to soar Adjustable rate mortgages saw a surge up to 8.5% of total applications last week

Didier Malagies • Apr 20, 2022


With rates at the highest level in a decade, mortgage applications for the week ending April 15 fell 5%, according to the latest survey by the Mortgage Bankers Association.


The drop was largely driven by an 8% decline in refinancing applications, which was 68% lower than the same week one year ago. The seasonally adjusted purchase index dropped 3% from the week prior, according to the trade group. Purchase mortgage applications were down 14% from the same week a year ago.


“Ongoing concerns about rapid inflation and tighter U.S. monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade. Rates increased across the board for all loan types, with the 30-year fixed rate hitting 5.2%, the highest level since 2010,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.


The dramatic uptick in mortgage rates – now 2 percentage points higher than they were a year ago – has effectively eliminated rate-term refinances. Home buyers have also seen their purchasing power erode, all while home prices keep rising.


“Home purchase activity has been volatile in recent weeks and has yet to see the typical pick up for this time of the year,” said Kan.


As a result, other types of mortgage products are seeing renewed interest. Adjustable-rate mortgages, which were all but cast aside during the low-rate years of 2020 and 2021, saw a surge up to 8.5% of total applications last week. That’s the highest level since 2019, the MBA noted. 


“As ARM loans typically have lower rates than fixed rate mortgages, and as this spread has widened, ARM loans have become more attractive to borrowers already facing home purchase loan amounts close to record highs,” Kan added in a statement. 


The refinance share of mortgage activity decreased to 35.7% of total applications from 37.1% the previous week. The FHA share of total applications increased to 9.9% from 9.5% the week prior. The VA share of total applications also increased, to 10.1%, up from 9.9% the week prior.


The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 5.20% from 5.13%, with points increasing slightly to 0.66 from 0.63. The average interest rate on 30-year fixed-rate jumbo mortgages jumped 8 basis points to 4.76%, with points increasing to 0.46 from 0.37 a week prior, the MBA reported.


As of Monday, rates on 30-year-fixed mortgages averaged 5.27% on Black Knight‘s Optimal Blue OBMMI pricing engine.



The MBA last week lowered its forecast for both refinance and purchase originations this year. The trade group now forecasts purchase originations to rise 4.6% to $1.72 trillion in 2022, followed by gains of 3% in 2023 and 4% in 2024. Refinances are expected to fall 64% to $841 billion in 2022, followed by a 20% drop in 2023.




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By Didier Malagies 18 Apr, 2024
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By Didier Malagies 15 Apr, 2024
Experts from the University of Texas at Austin and the University of Georgia are weighing in on recent federal attention that senior caregivers have received after President Joe Biden highlighted these issues in his State of the Union address last month. The experts say that adequately serving seniors who prefer to age in place will be a “challenge for generations.” Jacqueline Angel, the Wilbur J. Cohen professor of health and social policy at UT’s LBJ School of Public Affairs; and Toni P. Miles, the pope scholar in residence at the Rosalynn Carter Institute for Caregivers and professor emerita at UGA, co-authored an article that was published in the Waco Tribune-Herald that attempts to address these challenges and the need for more attention and resources. “In high-income countries, a smaller number of families can assume [the caregiving] burden, and in the United States it is increasingly relegated to either the federal or state governments through Social Security, Medicare and Medicaid,” the pair wrote. “In the future, the government will be forced to play an even greater role in the care of dependent citizens. Individuals who are not fully independent will need the intervention and support of several formal and informal sources of support.” The pair pointed out that attention paid to these issues in one of the highest-profile political speeches of the year helps underscore the need for “high-quality, affordable community-based care services to support family caregivers.” Most people do not understand that the Medicare program does not cover long-term care, and the pair contends that many in need of it are not prepared for its high costs . “It provides only a short period of care after discharge from the hospital,” the article reads. “This is far short of what would be needed for an impaired elder to remain at home. The national average cost of a semi-private room in a long-stay home is $105,000 a year, according to a 2023 Genworth Cost of Care Survey .” Because care burdens often fall on family members — particularly for seniors who overwhelmingly prefer to age in place — the pair contends that a “multifaceted approach is necessary and must involve all levels of government, as well as private and charitable organizations.”  Reverse mortgage professionals and retirement advisers have contended that older Americans could help fulfill some of their long-term care needs by using the proceeds from a reverse mortgage. “[A couple I previously profiled] considered a Home Equity Conversion Mortgage (HECM), also called a reverse mortgage, which can provide: 1. Additional cash income to pay for things like LTC premiums or other costs, and 2. Additional liquidity later in life if you pay interest on your HECM,” retirement adviser wrote Jerry Golden in a column published by Kiplinger, a personal finance website. This option helped the couple discover that their retirements could go further than they originally thought. “You might […] find that your retirement plan can pay for more than it could just a few years ago,” Golden said, referencing the couple’s use of a HECM product.
By Didier Malagies 15 Apr, 2024
 Rates are moving up now and several factors could be contributing to it, the 1 trillion dollars that the gov't is printing every 100 days could be inflationary. so what I see happening is there will have to be an event that happens to drop rates like we experienced in 2020. We will be paying 1.6 trillion in interest expense annually starting at the end of this year and are said to grow to 3 trillion annually next year. I say rates will have to come down in order for the Gov't to pay the interest expense, kicking the can down the road so to speak. We will have an opportunity to refinance the higher rate we have on our home and also refinance all the credit card debt, installment loans, car loans, and even student loan debt. The probability is great sometime down the road. Continue to watch the videos and when rates do make a significant drop will let my viewers know. Then it comes down to what is the cost vs the savings on a refinance. Opportunities will come just the timing not sure about. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
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