The final week of the year is often a sluggish week for the mortgage sector, but 2022 was different. The amount of activity was at its lowest point in 27 years. Data from the MBA for the week ending December 30 show that seasonally adjusted mortgage applications dropped 13.2% from two weeks prior. This was a result of the mortgage market’s reaction to the Federal Reserve’s tightening monetary policy, which was reflected in increased rates for borrowers.
According to the MBA, 30-year fixed-rate mortgages with conforming loan amounts ($647,200 or less) rose from 6.42% the week before to 6.58% for the week ending December 30. Rates for jumbo loans over $647,200 stayed at 6.12%.
Lenders and loan officers are thus starting 2023 from a low position and are anticipating a recovery in the second half of the year. Because borrowing prices are rising and the likelihood of a recession is believed to be increasing, business leaders are feeling more pessimistic. Because of worries about business prospects, more business leaders may decide to stop hiring or lay off more people in 2023.
According to MBA statistics, the number of refinancing applications fell by 16.3% over the previous two weeks for the week ending December 30. Refinancing applications make up less than a third of the market and are 87% lower than they were a year ago. Rates are still over double what they were in 2021. Refis are predicted to decline even further this year. Cash-out refinances, which were still popular among lenders in 2022, would cost more and be more difficult to get in 2023 as a result of the new regulations. To read more on this, click here.