Record Low Rates Drive Mortgage Applications Increase in MBA Weekly Survey
Mortgage applications rose for the fourth time in five weeks as key interest rates once again fell to record lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending August 7.
The Market Composite Index increased by 6.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 6 percent compared to the previous week.
The unadjusted Refinance Index increased by 9 percent from the previous week and was 47 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 65.7 percent of total applications from 63.9 percent the previous week.
The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent compared to the previous week and was 22 percent higher than the same week one year ago.
The FHA share of total applications increased to 10.4 percent from 9.6 percent the week prior. The VA share of total applications increased to 11.4 percent from 11.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.
“Mortgage rates fell across the board last week, as investors grew less optimistic of the economic rebound given the resurgence of virus cases,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Loan types such as the 30-year fixed, 15-year fixed, and jumbo all reached survey lows. Refi activity responded to these lower rates, with the refi share reaching almost 66 percent of all applications, its highest level since May. And the refi index jumped 9 percent, reaching its highest level since April, as both conventional and government applications for refinances increased.”
Kan said home purchase activity continued its strong run with a 2 percent increase over the week and 22 percent from a year ago. “While this was still positive news for the purchase market, the gradual slowdown in the improvement in the job market and tight housing inventory remain a concern for the coming months, even as low mortgage rates continue to provide support,” he said.
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.06 percent from 3.14 percent, with points decreasing to 0.33 from 0.39 (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 3.40 percent from 3.51 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 30-year fixed-rate mortgages backed by FHA decreased to 3.23 percent from 3.27 percent, with points decreasing to 0.33 from 0.42 (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 2.67 percent from 2.73 percent, with points decreasing to 0.35 from 0.37 (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 decreased to 3.00 percent from 3.09 percent, with points increasing to 0.30 from -0.03 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The ARM share of activity decreased to 2.7 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.
