Refis Up, Purchases Down in MBA Weekly Survey as Rates Hit New Low

With mortgage interest rates falling yet again to record lows, homeowners took advantage to refinance; purchase buyers, not so much, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending December 4. 

The previous week’s results included an adjustment for the Thanksgiving holiday.

The Market Composite Index fell by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 40 percent compared to the previous week. 

The unadjusted Refinance Index increased by 2 percent from the previous week and was 89 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 72.0 percent of total applications from 69.5 percent the previous week.

The seasonally adjusted Purchase Index decreased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 29 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 9.9 percent from 9.1 percent the week prior. The VA share of total applications increased to 12.7 percent from 11.9 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Refinance activity increased last week in response to mortgage rates for 30-year, 15-year and FHA loans hitting their lowest levels in MBA’s survey,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The increase in refinance applications was driven by FHA and VA refinances, while conventional activity fell slightly. The ongoing refinance wave has continued through the fall, with activity last week up 89 percent from a year ago.”

Kan noted the purchase market is also poised to finish 2020 on a strong note. “Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving,” he said. “Reversing the recent trend, there was also a shift in the composition of purchase applications, with an increase in government loans pushing the average loan balance lower.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to a survey low of 2.90 percent from 2.92 percent, with points increasing to 0.35 from 0.31 (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) increased to 3.20 percent from 3.19 percent, with points decreasing to 0.28 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 decreased to a survey low of 2.97 percent from 3.00 percent, with points increasing to 0.40 from 0.34 (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 a survey low of 2.51 percent from 2.53 percent, with points increasing to 0.35 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 2.60 percent from 2.63 percent, with points decreasing to 0.40 from 0.47 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 1.7 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.