Applications Down 7th Straight Week in MBA Weekly Survey

Mortgage applications fell for the seventh straight week as key interest rates jumped to seven-year highs, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending May 18.

The Market Composite Index decreased by 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent compared to the previous week.

The Refinance Index (unadjusted) decreased by 4 percent from the previous week to its lowest level since December 2000. The refinance share of mortgage activity decreased to 35.7 percent of total applications from 35.9 percent the previous week.

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

The FHA share of total applications remained unchanged at 10.3 percent from the week prior. The VA share of total applications decreased to 9.8 percent from 10.3 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

“Treasury rates increased 10 basis points last week, driven largely by favorable news on retail sales data and industrial production in April, which more than offset data showing still-slow new residential construction,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “As a result of rising rates, refinance applications continued to decrease, with the refinance index hitting its lowest level since December 2000. Purchase applications decreased over the week while the average loan amount for purchase loans increased to over $320,000 after averaging around $317,000 for the past 4 weeks, likely a sign that inventory for lower priced homes remains low and the mix is still skewed toward larger loan balances.”

MBA reported 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 2011, 4.86 percent, from 4.77 percent, with points increasing to 0.52 from 0.50 (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 September 2013, 4.81 percent from 4.73 percent, with points increasing to 0.42 from 0.35 (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 its highest level since May 2011, 4.90 percent from 4.78 percent, with points increasing to 0.85 from 0.76 (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 February 2011, 4.31 percent from 4.20 percent, with points increasing to 0.56 from 0.53 (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 increased to its highest level in the history of the survey, 4.12 percent from 4.09 percent, with points decreasing to 0.46 from 0.56 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity increased to 6.8 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.