Mortgage Applications Dip in MBA Weekly Survey

Mortgage applications fell for the fourth time in five weeks even as key interest rates held near record lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending September 11.

This week’s results include an adjustment for the Labor Day holiday.

The Market Composite Index decreased by 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 13 percent compared to the previous week.

The unadjusted Refinance Index decreased by 4 percent from the previous week and was 30 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 62.8 percent of total applications from 63.1 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 12 percent compared to the previous week and was 6 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.7 percent from 10.2 percent the week prior. The VA share of total applications increased to 12.3 percent from 11.2 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.07 percent, with points decreasing to 0.32 from 0.36 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

“Mortgage rates held steady last week, and the 30-year fixed rate – at 3.07 percent – has now stayed near the 3 percent mark for the past two months,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “A 5 percent decline in conventional refinances pulled the overall index lower, but activity was still 30 percent higher than last year. With the flurry of refinance activity reported over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizeable drop in rates.”

Kan noted applications to buy a home also decreased last week, but the underlying trend remains strong. “Purchase activity has outpaced year-ago levels for 17 consecutive weeks, with a stronger growth in loans with higher balances pushing MBA’s average loan size to a new survey high of $370,200,” he said.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.41 percent from 3.40 percent, with points decreasing to 0.27 from 0.31 (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 remained unchanged at 3.16 percent, with points decreasing to 0.35 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 2.61 percent from 2.62 percent, with points increasing to 0.35 from 0.33 (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 3.20 percent from 2.99 percent, with points remaining unchanged at 0.58 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The adjustable-rate mortgage share of activity increased to 2.3 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.