Rising Rates Chill Mortgage Applications Again in MBA Weekly Survey

Mortgage applications fell yet again from one week earlier as key interest rates hit their highest levels since October 2014, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending December 9.

The Market Composite Index decreased by 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 5 percent compared to the previous week.

The Refinance Index decreased by 4 percent from the previous week. The refinance share of mortgage activity increased to 57.2 percent of total applications from 56.2 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 7 percent compared to the previous week and was 2 percent higher than the same week one year ago.

“At this point, the market has already priced in the short term rate increase which is expected from the Federal Open Market Committee today,” said MBA Vice President of Research and Economics Lynn Fisher. “Refinance application activity nonetheless continued to fall last week and average refinance loan sizes declined as more rate sensitive borrowers stayed away. Despite recent rate increases, applications for purchase mortgages remained at levels on par with this past summer on a seasonally adjusted basis.”

MBA reported the FHA share of total applications increased to 11.6 percent from 11.3 percent the week prior. The VA share of total applications decreased to 11.9 percent from 12.6 percent the week prior. The USDA share of total applications remained unchanged at 0.9 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since October 2014, 4.28 percent, from 4.27 percent, with points decreasing to 0.36 from 0.37 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to its highest level since September 2014, 4.29 percent, from 4.22 percent, with points decreasing to 0.24 from 0.29 (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 increased to 4.02 percent from 4.00 percent, with points decreasing to 0.33 from 0.38 (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 3.52 percent from 3.53 percent, with points decreasing to 0.38 from 0.39 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.28 percent from 3.39 percent, with points remaining unchanged at 0.28 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 6.2 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.