Mortgage Applications Decrease in MBA Weekly Survey

What goes up, must come down. Following a stellar start to the month last week, in which mortgage applications jumped by more than 30 percent after the New Year’s holiday, the pendulum swung back slightly.

Mortgage applications decreased by 1.2 percent from one week earlier, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending January 17. 

The Market Composite Index decreased by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 0.4 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 2 percent from the previous week but was 116 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 61.6 percent of total applications from 62.9 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 4 percent compared to the previous week and was 8 percent higher than the same week one year ago.

The FHA share of total applications decreased to 11.3 percent from 12.7 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 0.5 percent the week prior.

“Mortgage applications dipped slightly last week after two weeks of healthy increases, but even with a slight decline, the total pace of applications remains at an elevated level,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The purchase market has started 2020 on a strong note, running 8 percent higher than the same week a year ago. Refinance applications remained near the highest level since October 2019, as the 30-year fixed rate was unchanged at 3.87 percent, while the 15-year fixed rate decreased to its lowest level since November 2016.

Kan noted even with more positive developments surrounding the U.S. and China trade negotiations and healthy retail sales data, investors seemed cautious and maintained their demand for safer U.S. Treasuries, which kept yields lower. “Our expectation is that rates will stay along this same narrow range,” he said. 

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.87 percent, with points decreasing to 0.27 from 0.32 (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 3.87 percent from 3.83 percent, with points decreasing to 0.21 from 0.24 (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 3.78 percent, with points decreasing to 0.25 from 0.30 (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 the lowest level since November 2016, 3.25 percent, from 3.30 percent, with points decreasing to 0.22 from 0.27 (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 decreased to 3.29 percent from 3.35 percent, with points increasing to 0.25 from 0.11 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 4.6 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.