Mortgage Applications Dip in MBA Weekly Survey

Mortgage applications fell slightly from one week earlier despite interest rates holding at record lows, the Mortgage Bankers Association reported in its Weekly Mortgage Applications Survey for the week ending April 17. 

The Market Composite Index decreased by 0.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 0.1 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 1 percent from the previous week and was 225 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 75.4 percent of total applications from 76.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 3 percent compared to the previous week and was 31 percent lower than the same week one year ago.

“Mortgage applications were essentially unchanged last week, as a slight drop in refinance activity was offset by a 2 percent increase in purchase applications,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “California and Washington, two states hit hard by COVID-19, saw another week of rising activity – partly driving the overall increase. Despite the weekly gain, the purchase index remained close to its lowest level since 2015, and was over 30 percent lower than a year ago.”

Kan said the pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. “This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year,” he said.   

Kan noted despite the 30-year fixed rate remaining at a record low in MBA’s survey, the refinance index dropped slightly last week but remained close to its 2013 highs. “Borrowers continue to take advantage of low rates to gain some monthly savings, which is a welcome reprieve during these tough economic times,” he said.

Looking at the impact at the state level, here are results showing the non-seasonally adjusted, week over week percent change in the number of purchase applications from Washington, California and New York:

The FHA share of total applications increased to 10.3 percent from 9.5 percent the week prior. The VA share of total applications decreased to 13.8 percent from 14.3 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.45 percent, with points unchanged at 0.29 (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 $510,400) increased to 3.81 percent from 3.80 percent, with points increasing to 0.34 from 0.23 (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 decreased to 3.33 percent from 3.45 percent, with points unchanged at 0.19 (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 3.03 percent from 3.04 percent, with points increasing to 0.33 from 0.27 (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 decreased to 3.29 percent from 3.34 percent, with points decreasing to -0.15 from 0.35 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 2.8 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.