Applications Up Slightly in MBA Weekly Survey

Mortgage application activity barely moved from a week earlier as key interest rates jumped to the highest levels in more than three years, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending February 2.

The Market Composite Index increased by 0.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 4 percent compared to the previous week.

The Refinance Index increased by 1 percent from the previous week. The refinance share of mortgage activity decreased to 46.4 percent of total applications, its lowest level since July 2017, from 47.8 percent the previous week.

The seasonally adjusted Purchase Index remained unchanged from one week earlier. The unadjusted Purchase Index increased by 7 percent compared to the previous week and was 8 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.4 percent from 10.7 percent the week prior. The VA share of total applications remained unchanged at 10.1 percent from the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

“While the stock market leapt into the New Year with strong gains, only to give it all back over the past few days, interest rates have generally moved higher, with the 10-year Treasury and 30-year mortgage rates about 30 basis points higher than where we started at the beginning of January,” said MBA Chief Economist Mike Fratantoni. “A strong job market, accelerating wage growth, and expectations of faster rate hikes from the Fed all have played roles in pushing up longer-term rates.”

Fratantoni noted even with the rate increase, there was little change in refinance application volume for the week. “However, there has been little change in refinance application volume over the last month or frankly over the last year,” he said. “We seem to be at or close to a floor with respect to refinances.”

Fratantoni said February is really the kickoff for the spring buying season each year. “This week, we saw a 7 percent increase in purchase applications,” he said. “However, that just represents typical seasonal growth at this time of year, so on an adjusted basis, purchase volume was flat. On a year/year basis, purchase volume was up 8 percent, consistent with the strong reading we received on the job market on Friday.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since April 2014, 4.50 percent, from 4.41 percent, with points increasing to 0.57 from 0.56 (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 $453,100) increased to its highest level since April 2014, 4.47 percent, from 4.34 percent, with points increasing to 0.44 from 0.40 (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 4.47 percent from 4.40 percent, with points increasing to 0.69 from 0.68 (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 its highest level since April 2011, 3.92 percent, from 3.85 percent, with points increasing to 0.65 from 0.60 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.77 percent from 3.79 percent, with points increasing to 0.42 from 0.41 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 6.1 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.