Mortgage Applications Strong in MBA Weekly Survey

Mortgage application activity continued its strong early 2020 pace, buoyed by the lowest interest rates in more than three years, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending January 24.

This week’s results include an adjustment for the Martin Luther King Jr. holiday.

The Market Composite Index increased by 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 1 percent compared to the previous week. 

The unadjusted Refinance Index increased by 8 percent from the previous week and was 146 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 60.4 percent of total applications from 61.6 percent the previous week.

The seasonally adjusted Purchase Index increased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 2 percent compared to the previous week and was 17 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.7 percent from 11.3 percent the week prior. The VA share of total applications decreased to 11.7 percent from 13.8 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

“Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Rates were driven lower by investors’ increased concern about the economic impact from China’s coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks. With the 30-year fixed rate at its lowest level since November 2016, refinances jumped 7.5 percent. Purchase applications grew 2 percent and were more than 16 percent higher than the same week last year. Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019.” 

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.81 percent from 3.87 percent, with points increasing to 0.28 from 0.27 (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 3.78 percent from 3.87 percent, with points decreasing to 0.2 from 0.21 (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 increased to 3.82 percent from 3.78 percent, with points increasing to 0.27 from 0.25 (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 3.24 percent from 3.25 percent, with points unchanged at 0.22 (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 3.15 percent from 3.29 percent, with points decreasing to 0.12 from 0.25 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 4.7 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.