Applications Down in MBA Weekly Survey

Mortgage applications fell for the first time in a month even as key interest rates fell to three-month lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending December 14.

The Market Composite Index decreased by 5.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 7 percent compared to the previous week.

The (unadjusted) Refinance Index decreased by 2 percent from the previous week. The refinance share of mortgage activity increased to 43.5 percent of total applications, its highest level since February, from 41.5 percent the previous week.

The seasonally adjusted Purchase Index decreased by 7 percent from one week earlier. The unadjusted Purchase Index decreased by 10 percent compared to the previous week and was 2 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.4 percent from 10.8 percent the week prior. The VA share of total applications decreased to 9.9 percent from 10.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase applications decreased almost 7 percent over the week and refinances decreased around 2 percent, led by a larger decline in government refinances compared to conventional refinances.”

With rates continuing to slide lower, Kan noted, refinance borrowers with larger loan balances seemed more apt to take action. The average loan balance for refinance loans increased to its highest level since September 2017.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to its lowest level since September, 4.94 percent, from 4.96 percent, with points decreasing to 0.43 from 0.48 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to its lowest level since September, 4.74 percent, from 4.80 percent, with points decreasing to 0.26 from 0.33 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to its lowest level since September, 4.95 percent, from 4.97 percent, with points decreasing to 0.51 from 0.55 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since September, 4.37 percent, from 4.41 percent, with points decreasing to 0.37 from 0.44 (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 its lowest level since September, 4.17 percent, from 4.24 percent, with points increasing to 0.42 from 0.34 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 7.9 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.

Please Note: MBA offices will close Monday, December 24 until Wednesday, January 2, 2019. Results for the week ending December 21 will not be released on December 26; The MBA Weekly Applications Survey will resume on Thursday, January 3, 2019 with results for the two weeks prior.