Mortgage Applications Increase 2nd Straight Week in MBA Weekly Survey
No record-low interest rates this time, but the 30-year fixed rate was low enough to attract another push of refinance applications for the second straight week, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending December 18.
The overall Market Composite Index increased by 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 1 percent compared to the previous week.
The reason? Refinances. MBA reported the unadjusted Refinance Index increased by 4 percent from the previous week and was 124 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 74.8 percent of total applications from 72.7 percent the previous week.
The seasonally adjusted Purchase Index decreased by 5 percent from one week earlier. The unadjusted Purchase Index decreased by 7 percent compared to the previous week and was 26 percent higher than the same week one year ago.
The FHA share of total applications increased to 11.5 percent from 11.0 percent the week prior. The VA share of total applications increased to 13.8 percent from 12.1 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.
“The 30-year fixed rate – at 2.86 percent – is a full percentage point below a year ago,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Last week’s increase in refinance applications was driven by FHA and VA activity, while conventional refinances saw a slight decline. Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms.”
Purchase applications, on the other hand, fell for the second time in three weeks, Kan noted, as both conventional and government applications saw a drop-off. “Despite the decline, purchase applications remained 26 percent higher than the same week a year ago, and the average loan balance reached another record high,” he said.
Kan added the housing market still shows signs of relative strength as 2020 ends. “However, housing affordability will be worth monitoring next year,” he said. “The lower loan size segment of the market –particularly for entry-level and first-time buyers – continues to be impacted by rapidly increasing home prices and tight inventory.”
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.86 percent from 2.85 percent, with points unchanged at 0.33 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.10 percent from 3.12 percent, with points decreasing to 0.29 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 2.90 percent from 2.96 percent, with points decreasing to 0.32 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 2.43 percent from 2.49 percent, with points decreasing to 0.28 from 0.29 (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 2.71 percent from 2.58 percent, with points increasing to 0.48 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The ARM share of activity increased to 1.9 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.
Please Note: MBA offices will be closed Thursday, December 24 and will reopen on Monday, January 4, 2021. Due to the holiday, the results for weeks ending December 25 and January 1 will be released on January 6, 2021.
