Mortgage Applications Surge in MBA Weekly Survey
For prospective home buyers, you Brexit, you bought it.
Mortgage Applications surged last week as key interest rates continued to head downward, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 1.
The Market Composite Index increased by 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 14 percent compared to the previous week.
The Refinance Index increased by 21 percent from the previous week to its highest level since January 2015. The refinance share of mortgage activity increased to 61.6 percent of total applications, the highest level since February, from 58.1 percent the previous week.
The seasonally adjusted Purchase Index increased by 4 percent from one week earlier. The unadjusted Purchase Index increased by 4 percent compared to the previous week and was 23 percent higher than the same week one year ago.
“Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed,” said MBA Chief Economist Mike Fratantoni. “Mortgage rates have been low for years, but the impact of Brexit has brought us close to record lows once again, with jumbo rates already at their lowest levels, giving more borrowers a larger incentive to refinance.”
Fratantoni added in addition to the increase in refinance activity, lower rates also seem to be helping potential homebuyers jump into the market. “Even though financial market volatility may be causing some anxiety, the combination of low rates and a still strong job market in the U.S. outweighs those fears for these homebuyers,” he said.
MBA reported the FHA share of total applications decreased to 9.5 percent from 10.6 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.
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, 3.66 percent, from 3.75 percent, with points decreasing to 0.32 from 0.36 (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 its lowest level since January 2011, 3.67 percent, from 3.74 percent, with points decreasing to 0.24 from 0.34 (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 May 2013, 3.56 percent, from 3.61 percent, with points decreasing to 0.31 from 0.37 (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 May 2013, 2.96 percent, from 3.02 percent, with points decreasing to 0.32 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 decreased to its lowest level since April 2015, 2.85 percent, from 2.88 percent, with points decreasing to 0.26 from 0.30 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity decreased to 5.6 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.
