Rates Rise, Applications Drop in MBA Weekly Survey

Mortgage interest rates rose for the first time since early May, triggering a drop in mortgage applications last week, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 14.

The Market Composite Index decreased y 3.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent compared to the previous week.

The unadjusted Refinance Index decreased by 4 percent from the previous week. The refinance share of mortgage activity increased to 50.2 percent of total applications from 49.8 percent the previous week.

The seasonally adjusted Purchase Index decreased by 4 percent from one week earlier. The unadjusted Purchase Index decreased by 5 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 9.4 percent from 8.9 percent the week prior. The VA share of total applications increased to 11.9 percent from 11.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

“After seeing a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “Borrowers were sensitive to rising rates, but the refinance share of applications was still at its highest level since January 2018, and refinance activity was at its second-highest level this year. Government refinances actually increased last week, led by a 17 percent in VA refinance applications, while conventional refinance applications decreased 7 percent.”

Kan noted while purchase applications decreased by more than 3 percent last week, they were still up by nearly 4 percent from last year. “Strong demand from first-time buyers and low unemployment continue to push this year’s purchase activity above a year ago,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.14 percent from 4.12 percent, with points increasing to 0.38 from 0.33 (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 $484,350) remained unchanged at 4.04 percent, with points increasing to 0.24 from 0.17 (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 4.12 percent from 4.09 percent, with points increasing to 0.44 from 0.26 (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 3.50 percent from 3.53 percent, with points increasing to 0.33 from 0.32 (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 3.45 percent from 3.43 percent, with points decreasing to 0.23 from 0.32 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased 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.