Rates Hit 3-Year Low in MBA Weekly Survey
Mortgage rates fell last week to their lowest level in three years, but it wasn’t enough to drive application activity, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 24.
The Market Composite Index decreased by 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent compared to the previous week.
The Refinance Index decreased by 2 percent from the previous week. The refinance share of mortgage activity increased to 58.1 percent of total applications from 57.7 percent the previous week.
The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 4 percent compared with the previous week and was 13 percent higher than the same week one year ago.
The FHA share of total applications decreased to 10.6 percent from 11.7 percent the week prior. The VA share of total applications increased to 12.2 percent from 11.1 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.
“Friday’s Brexit vote had only a minimal impact on the average mortgage rate last week,” said MBA Chief Economist Mike Fratantoni. “Thirty-year fixed contract rates were down just 1 basis point and were unchanged on an effective basis. As a result, refinance activity slowed a bit, but was still up 63 percent from a year ago.”
Fratantoni added the Brexit vote led to a large drop in Treasury rates, nearly 20 basis points initially and an additional 10 basis points on Monday, before stabilizing somewhat on Tuesday.
“Whether the impact of Brexit will be contained to the initial shock of the ‘Vote Leave’ victory or will have a longer-term impact on markets is unclear, as even the terms and conditions of the United Kingdom’s withdrawal from the EU remain to be seen,” Fratantoni said. “MBA’s best guess at this point is that the impact on the mortgage market will be to keep mortgage rates lower for longer, leading to another pickup in refinance activity in the near future.”
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) to its lowest level since May 2013, 3.75 percent, from 3.76 percent, with points increasing to 0.36 from 0.33 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.74 percent from 3.70 percent, with points increasing to 0.34 from 0.28 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by FHA remained unchanged at 3.61 percent, with points increasing to 0.37 from 0.24 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.02 percent from 3.04 percent, with points increasing to 0.38 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 2.88 percent from 2.92 percent, with points increasing to 0.30 from 0.21 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The ARM share of activity increased to 5.9 percent of total applications.
The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
