Record-Low Rates Spur Increase in MBA Weekly Applications Survey

With the 30-year fixed mortgage rate sitting smack on 3 percent, mortgage seekers got the message, sparking an increase in mortgage applications last week, the Mortgage Bankers Association reported this morning.

The MBA Weekly Mortgage Applications Survey for the week ending October 23 reported a 1.7 percent increase in the overall Market Composite Index, seasonally adjusted, from one week earlier. On an unadjusted basis, the Index increased by 2 percent compared to the previous week. 

The unadjusted Refinance Index increased by 3 percent from the previous week and was 80 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 66.7 percent of total applications from 66.1 percent the previous week.

The seasonally adjusted Purchase Index increased by 0.2 percent from one week earlier. The unadjusted Purchase Index decreased by 0.3 percent compared to the previous week and was 24 percent higher than the same week one year ago.

The FHA share of total applications decreased to 11.7 percent from 11.8 percent the week prior. The VA share of total applications decreased to 11.4 percent from 12.6 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

“Mortgage applications to buy a home were flat compared to the prior week, but overall activity remains strong this fall,” said Joel Kan, MBA Associative Vice President of Economic and Industry Forecasting. “Applications jumped 24 percent compared to last year, and the average loan size reached another record high at $372,600. These results highlight just how strong the upper end of the market is right now, with outsized growth rates in the higher loan size categories.”

Furthermore, Kan noted, housing inventory shortages have pushed national home prices considerably higher on an annual basis. “Refinance activity has been somewhat volatile over the past few months but did increase almost 3 percent last week,” he said. “With the 30-year fixed rate at MBA’s all-time survey low of 3.00 percent, conventional refinances rose 5 percent. However, the government refinance index decreased for the first time in a month, driven by a slowdown in VA refinance activity.”

Indeed, MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.00 percent from 3.02 percent, with points decreasing to 0.35 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 $510,400) decreased to 3.28 percent from 3.33 percent, with points increasing to 0.31 from 0.30 (including the 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 increased to 3.14 percent from 3.12 percent, with points unchanged at 0.35 (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 decreased to 2.60 percent from 2.61 percent, with points increasing to 0.37 from 0.31 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to 3.05 percent from 2.86 percent, with points increasing to 0.64 from 0.58 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 2.1 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.