Mortgage Applications Rise Again in MBA Weekly Survey
Mortgage applications got another boost from the recent Brexit vote, which drove interest rates to their lowest levels since 2013, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 8.
The week’s results included an adjustment for the Independence Day holiday.
The Market Composite Index increased by 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 14 percent compared to the previous week.
The Refinance Index increased by 11 percent from the previous week. The refinance share of mortgage activity increased to 64.0 percent of total applications from 61.6 percent the previous week.
The seasonally adjusted Purchase Index was unchanged from one week earlier. The unadjusted Purchase Index decreased by 20 percent compared to the previous week and was 5 percent lower than the same week one year ago. Last year, the Fourth of July fell on the prior week.
The FHA share of total applications increased to 10.0 percent from 9.5 percent the week prior. The VA share of total applications decreased to 12.1 percent from 12.8 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent the week prior.
“Investors continued to seek safety in U.S. assets given the global turbulence following the Brexit vote,” said MBA Chief Economist Mike Fratantoni. “After making an adjustment for the July 4th holiday, refinance application volume increased more than 11 percent to the highest level in three years as homeowners jumped at the chance of grabbing low rates before they disappear.”
Fratantoni said MBA noted two “interesting” trends in the data. “First, for the second week in a row, jumbo rates exceeded conforming rates on 30-year fixed-rate loans, reversing the pattern that has been in place for much of the past three years. This could be a sign that banks are being somewhat more cautious in putting long-term, fixed-rate assets on their balance sheets at these rate levels.
“Second, FHA share of the market is declining again, dropping to 10 percent or below the last two weeks, its lowest market share since January 2015. Some lenders remain cautious regarding the FHA program given the potential liability exposure. At the same time, there are now a growing number of conventional mortgage products designed for first-time homebuyers that may be a good substitute for FHA loans.”
MBA said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.60 percent, from 3.66 percent, with points increasing to 0.36 from 0.32 (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) decreased to 3.61 percent from 3.67 percent, with points increasing to 0.32 from 0.24 (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 3.53 percent from 3.56 percent, with points increasing to 0.32 from 0.31 (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 2.88 percent from 2.96 percent, with points increasing to 0.34 from 0.32 (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 2.78 percent from 2.85 percent, with points decreasing to 0.25 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity decreased to 5.2 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.
