Mortgage Applications Drop in Latest MBA Weekly Survey

Mortgage interest rates jumped back over 3 percent last week, resulting in a decrease in mortgage refinance applications, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending August 14.

The Market Composite Index decreased by 3.3 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 5 percent from the previous week but was 38 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 64.6 percent of total applications from 65.7 percent the previous week.

The seasonally adjusted Purchase Index increased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week and was 27 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.3 percent from 10.4 percent the week prior. The VA share of total applications decreased to 11.2 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

“Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks,”  said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The rise in rates dampened refinance activity, but purchase applications continued their strong run and were 27 percent higher than a year ago – the third straight month of year-over-year increases.”

Kan noted conventional purchase applications drove last week’s increase, while applications for government loans decreased. “The housing market remains a bright spot in the current economic recovery and these results, combined with July data on housing starts and homebuilder optimism, suggest that housing supply could be increasing to better meet the strong demand for buying a home,” he said. 

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.13 percent from 3.06 percent, with points increasing to 0.36 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 $510,400) increased to 3.41 percent from 3.40 percent, with points increasing to 0.35 from 0.31 (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 3.16 percent from 3.23 percent, with points decreasing to 0.27 from 0.33 (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 increased to 2.73 percent from 2.67 percent, with points increasing to 0.36 from 0.35 (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 2.95 percent from 3.00 percent, with points increasing to 0.41 from 0.30 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity remained unchanged at 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.