Mortgage Applications Mixed Despite Record-Low Rates

Despite record-low mortgage rates, mortgage applications fell by 0.5 percent from one week earlier, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending November 6. 

The Market Composite Index decreased by 0.5 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 1 percent from the previous week and was 67 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 70 percent of total applications from 68.7 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 5 percent compared to the previous week and was 16 percent higher than the same week one year ago.

“Mortgage application activity was mixed last week, despite the 30-year fixed rate decreasing to 2.98 percent – an all-time MBA survey low,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The refinance index climbed to its highest level since August, led by a 1.5 percent increase in conventional refinances. The purchase market continued its recent slump, with the index decreasing for the sixth time in seven weeks to its lowest level since May.”

Kan said homebuyer demand is still strong overall, and activity was up 16.5 percent from a year ago. “However, inadequate housing supply is putting upward pressure on home prices and is impacting affordability – especially for first-time buyers and lower-income buyers,” Kan said. “The trend in larger average loan application sizes and growth in loan amounts points to the continued rise in home prices, as well as the strength in the upper end of the market.”

MBA said the FHA share of total applications decreased to 10.6 percent from 11.1 percent the week prior. The VA share of total applications increased to 12.6 percent from 12.2 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 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) decreased to a record survey low of 2.98 percent from 3.01 percent, with points decreasing to 0.35 from 0.38 (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 3.13 percent from 3.18 percent, with points increasing to 0.31 from 0.30 (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 3.08 percent, with points increasing to 0.37 from 0.26 (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 2.55 percent, with points increasing to 0.37 from 0.35 (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 increased to 2.79 percent from 2.67 percent, with points decreasing to 0.42 from 0.52 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 2.0 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.