Mortgage Applications Decrease in MBA Weekly Survey

Mortgage applications decreased 5.1 percent from one week earlier, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 31. 

The Market Composite Index decreased by 5.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 5 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 7 percent from the previous week and was 84 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 63.9 percent of total applications from 65.1 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent compared to the previous week and was 22 percent higher than the same week one year ago.

The FHA share of total applications remained unchanged from 9.6 percent the week prior. The VA share of total applications remained unchanged from 11.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

“Mortgage rates dropped to another record low last week, falling below the previous record set three weeks ago to 3.14 percent,” said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. “Refinance activity decreased–despite the decline in rates–but the current pace remains more than 80 percent higher than a year ago when rates were over 4 percent.”

Kan noted MBA’s forecast calls for rates to remain at these low levels, “which will continue to spur strong refinance activity and offer homeowners relief in the form of lower monthly mortgage payments during these uncertain economic times.”

Purchase applications also fell slightly, but were still 20 percent higher than a year ago and have now risen year-over-year for 11 straight weeks, Kan said. “Purchase loan balances continued to climb, which is perhaps a sign that the still-weak job market and tighter credit for government loans are constraining some first-time homebuyers,” 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 3.14 percent from 3.20 percent, with points increasing to 0.39 from 0.37 (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 3.51 percent from 3.52 percent, with points increasing to 0.35 from 0.30 (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 remained unchanged at 3.27 percent, with points increasing to 0.42 from 0.35 (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 2.73 percent from 2.76 percent, with points increasing to 0.37 from 0.36 (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 3.09 percent from 3.08 percent, with points decreasing to -0.03 from 0.11 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 3.1 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.