Rates Drop, Applications Rise in MBA Weekly Survey

Mortgage applications increased last week as mortgage rates fell to nearly two-year lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 21.

The Market Composite Index increased by 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 1 percent compared to the previous week.

The unadjusted Refinance Index increased by 3 percent from the previous week. The refinance share of mortgage activity increased to 51.5 percent of total applications from 50.2 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent compared to the previous week and was 9 percent higher than the same week one year ago.

The FHA share of total applications increased to 9.6 percent from 9.4 percent the week prior. The VA share of total applications increased to 12.5 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.

“Markets last week reacted to a more dovish [Federal Open Market Committee] statement and forecast, with Treasury yields falling after the meeting,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “Mortgage rates dropped again for most loan types, which led to an increase in refinance activity, partly driven by a 9 percent jump in VA applications.”

Kan noted the 30-year fixed rate has now dropped in three of the past four weeks, and at 4.06 percent, reached its lowest level since September 2017. Despite these lower rates, purchase applications decreased by 2 percent, but were still considerably higher (9 percent) than a year ago. “Now at almost the half-way mark of 2019, we have generally seen a stronger purchase market than last year, despite still-tight existing inventory and insufficient new construction,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.06 percent from 4.14 percent, with points decreasing to 0.35 from 0.38 (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 $484,350) decreased to 4.00 percent from 4.04 percent, with points remaining unchanged at 0.24 (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 4.01 percent from 4.12 percent, with points decreasing to 0.36 from 0.44 (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 3.40 percent from 3.50 percent, with points decreasing to 0.31 from 0.33 (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 3.50 percent from 3.45 percent, with points increasing to 0.29 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 6.5 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.