Mortgage Applications Decrease Again in MBA Weekly Survey

Mortgage applications fell for the second straight week, albeit slightly, even as key interest rates continued to hover at record lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 26.

The Market Composite Index decreased by 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 2 percent compared to the previous week.

The unadjusted Refinance Index decreased by 2 percent from the previous week but was 74 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 61.2 percent of total applications from 61.3 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared to the previous week and was 15 percent higher than the same week one year ago.

The FHA share of total applications increased to 11.7 percent from 11.4 percent the week prior. The VA share of total applications decreased to 10.8 percent from 11.0 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

“Mortgage applications fell last week despite mortgage rates hitting another record low in MBA’s survey,” said Joel Kan, MBA Associative Vice President of Economic and Industry Forecasting. “Investors are contemplating the risks of the recent resurgence of COVID-19 cases to the labor market and economy, and Treasury rates and mortgage rates are moving lower as a result. After two months of strong growth, purchase applications declined for the second week in a row. The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options. The average purchase application loan size increased to a record high in our survey – more proof that tight inventory conditions are leading to faster price growth.”

Kan noted refinance applications also decreased but remained 74 percent higher than a year ago. “The 30-year fixed rate has been below the 3.5 percent mark since late March,” he said. “It is possible that many borrowers have already refinanced or are waiting for rates to go even lower.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to a record-low 3.29 percent from 3.30 percent, with points increasing to 0.36 from 0.32 (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 $484,350) decreased to 3.59 percent from 3.62 percent, with points increasing to 0.31 from 0.29 (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 3.43 percent from 3.35 percent, with points increasing to 0.36 from 0.22 (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 remained unchanged at 2.81 percent, with points increasing to 0.40 from 0.30 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.04 percent from 3.09 percent, with points decreasing to -0.03 from 0.01 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 3.2 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.