Mortgage Applications Up in MBA Weekly Survey

Mortgage applications increased last week as key interest rates fell for the second consecutive week, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending Jan. 6.

The week’s results include an adjustment to account for the New Year’s Day holiday, while the previous week’s results were adjusted for the Christmas holiday.

The Market Composite Index increased 5.8 by percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 42 percent compared to the previous week.

The Refinance Index increased by 4 percent from the previous week. The refinance share of mortgage activity decreased to 51.2 percent of total applications from 52.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 6 percent from one week earlier. The unadjusted Purchase Index increased by 45 percent compared to the previous week and was 18 percent lower than the same week one year ago.

The FHA share of total applications increased to 11.7 percent from 11.6 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.3 percent the week prior. The USDA share of total applications decreased to 0.9 percent from 1.1 percent the week prior.

“Ten-year Treasury yields fell the week following New Year’s Day as markets continue to adjust their expectations about the incoming administration and Federal Reserve policy,” said MBA Vice President of Research & Economics Lynn Fisher. “This pulled the average mortgage rate down for the second week in a row, this time by 7 basis points. Once we adjust for the Monday holiday and seasonality, both purchase and refinance application activity increased modestly last week. The pick-up was especially notable in the government sector. Price spreads between Ginnie Mae and Fannie Mae securities widened during December, but this does not yet reflect the decrease in annual FHA mortgage insurance premiums announced this week, which will take effect on or after January 27.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.32 percent from 4.39 percent, with points decreasing to 0.41 from 0.43 (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 4.27 percent from 4.37 percent, with points decreasing to 0.31 from 0.44 (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 4.08 percent from 4.22 percent, with points increasing to 0.35 from 0.34 (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 3.56 percent from 3.64 percent, with points increasing to 0.42 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 3.32 percent from 3.28 percent, with points increasing to 0.46 from 0.42 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 5.5 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.