Mortgage Applications Down Over Break in MBA Weekly Survey
Mortgage applications fell for the week ending Dec. 20 from one week earlier as key interest rates edged up, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.
The Market Composite Index decreased by 5.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 6 percent compared to the previous week.
The unadjusted Refinance Index decreased by 5 percent from the previous week and was 128 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 62.6 percent of total applications from 62.2 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 5 percent higher than the same week one year ago.
The FHA share of total applications increased to 14.5 percent from 13.7 percent the week prior. The VA share of total applications increased to 15.2 percent from 12.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.99 percent from 3.98 percent, with points unchanged at 0.33 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.
“The 10-Year Treasury yield increased [the week ending December 20] amid signs of stronger home building activity and solid consumer spending, leading to a rise in conventional conforming and jumbo 30-year mortgage rates to just under 4 percent,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “With this increase, conventional refinance application volume fell 11 percent. Refinance applications for government loans did increase, even though rates on FHA loans picked up. The change in the mix of business has kept the average refinance loan size smaller than we had seen earlier this year.”
Fratantoni noted the holidays are the “slowest time of the year” for the purchase market. “Purchase application activity declined after the seasonal adjustment, but still remains about 5 percent ahead of last year’s pace,” he said. “The increase in construction activity will bolster housing inventories, which should be a positive for purchase volumes going into 2020.”
MBA said the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 3.97 percent from 3.96 percent, with points decreasing to 0.25 from 0.26 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.87 percent from 3.79 percent, with points decreasing to 0.33 from 0.36 (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 3.39 percent from 3.40 percent, with points unchanged at 0.26 (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 increased to 3.38 percent from 3.28 percent, with points decreasing to 0.21 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The ARM share of activity decreased to 4.1 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.
Please Note: MBA will release results of the Weekly Applications Surveys for the weeks ending December 27, 2019 and January 3, 2020 on Wednesday, January 8.
