Applications Up 3rd Straight Week in MBA Weekly Survey

Mortgage applications increased for the third consecutive week as key interest rates fell back below 5 percent, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending December 7.

The Market Composite Index increased by 1.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 1 percent compared to the previous week.

The (unadjusted) Refinance Index increased by 2 percent from the previous week. The refinance share of mortgage activity increased to 41.5 percent of total applications, the highest level since March, from 40.4 percent the previous week.

The seasonally adjusted Purchase Index increased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent compared to the previous week and was 4 percent higher than the same week one year ago.

The FHA share of total applications increased to 10.8 percent from 10.2 percent the week prior. The VA share of total applications increased to 10.2 percent from 10.0 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

“Mortgage rates fell across the board last week, driven by a similar slide in Treasuries,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “Trade fears dominated investors’ concerns for another week, and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.96 percent, the lowest level since September, from 5.08 percent, with points increasing to 0.48 from 0.44 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

“The 30-year fixed mortgage rate decreased 12 basis points over the week back below 5 percent, representing the largest single week drop since 2017,” Kan said. “As a result of these recent rate declines, we saw another weekly increase in refinance applications, along with a rise in the average refinance loan size. Larger loans tend to react more readily for a given change in mortgage rates. Meanwhile, purchase application activity also increased over the week and was up more than 3 percent compared to a year ago.”

MBA said the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.80 percent, the lowest level since September, from 4.89 percent, with points increasing to 0.33 from 0.30 (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 4.97 percent, the lowest level since September, from 5.05 percent, with points decreasing to 0.55 from 0.62 (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 4.41 percent, the lowest level since September, from 4.50 percent, with points decreasing to 0.44 from 0.60 (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 4.24 percent from 4.33 percent, with points increasing to 0.34 from 0.21 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 7.6 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.

Please Note: MBA offices will close Monday, December 24, 2018 until Wednesday, January 2, 2019. Results for the week ending December 21 will not be released on December 26; The MBA Weekly Applications Survey will resume on Thursday, January 3, 2019 with results for the two weeks prior.