Mortgage Applications Tick Up in MBA Weekly Survey

Mortgage applications increased from one week earlier as key interest rates held steady, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending August 26.

The Market Composite Index increased by 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 2 percent compared to the previous week.

The Refinance Index increased by 4 percent from the previous week. The refinance share of mortgage activity increased to 63.5 percent of total applications from 62.4 percent the previous week.

The seasonally adjusted Purchase Index increased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week and was 5 percent higher than the same week one year ago.

“Purchase application volume is still up on a year/year basis, but we have seen a deceleration over the past month, with volume up 5 percent compared to last year, less than the double digit gains we have seen for much of the past year,” said MBA Chief Economist Mike Fratantoni. “As the economy reaches full employment, the pace of job growth is slowing, and this will slow the growth in purchase activity as well, but we do continue to expect growth in home sales going forward.”

Refinance application volume remains strong, Fratantoni said. “However, rates remain quite low, and the last time rates were at these levels, the refi index was almost twice as high,” he said. “At these rate levels, there are borrowers who still stand to benefit, but there are many homeowners who have already taken advantage of refinancing and are not yet incentivized to do it again.”

Fratantoni noted the biggest contributor to the gain in refinance activity this week was FHA, which showed a 29 percent increase. “FHA refi volume has tended to be much more volatile on a week to week basis,” he said.

MBA said the FHA share of total applications increased to 9.7 percent from 8.9 percent the week prior. The VA share of total applications increased to 12.5 percent from 12.4 percent the week prior. The USDA share of total applications remained unchanged to 0.6 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 3.67 percent, with points decreasing to 0.33 from 0.34 (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 $417,000) increased to 3.63 percent from 3.62 percent, with points decreasing to 0.27 from 0.35 (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 increased to 3.54 percent from 3.53 percent, with points increasing to 0.36 from 0.34 (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 increased to 2.96 percent from 2.95 percent, with points decreasing to 0.31 from 0.38 (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 increased to 2.90 percent from 2.84 percent, with points decreasing to 0.24 from 0.37 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 4.5 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.