Despite Record-Low Rates, Mortgage Applications Dip in MBA Weekly Survey

Despite the lowest 30-year fixed rates in the history of the Mortgage Bankers Association’s Weekly Applications Survey, mortgage applicants appeared to step back for the week ending Oct. 9.

The Market Composite Index decreased by 0.7 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 decrease came despite the 30-year fixed rate falling to a record-low 3.00 percent.

The unadjusted Refinance Index decreased by 0.3 percent from the previous week but was 44 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 65.6 percent of total applications from 65.4 percent the previous week.

The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week but was 24 percent higher than the same week one year ago.

“Mortgage applications for refinances and home purchases both decreased slightly last week, despite the 30-year fixed mortgage rate declining to a new MBA survey low of 3.00 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications for government mortgages offset some of the overall decline by increasing 3 percent, driven by a solid gain in government purchase applications and an 11 percent jump in VA refinance applications.”

Kan noted refinance and purchase activity continue to run well ahead of last year’s pace, fueled by record-low rates and strong homebuyer demand. “Housing supply is a challenge for many aspiring buyers, but activity should continue to stay strong the rest of the year,” he said. 

MBA reported the FHA share of total applications decreased to 10.7 percent from 11.0 percent the week prior. The VA share of total applications increased to 13.4 percent from 12.2 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.

The survey said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.00 percent from 3.01 percent, with points decreasing to 0.32 from 0.37 (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 3.30 percent from 3.31 percent, with points increasing to 0.35 from 0.30 (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 3.12 percent, with points increasing to 0.35 from 0.32 (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 2.59 percent, with points decreasing to 0.32 from 0.36 (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 2.63 percent from 2.80 percent, with points increasing to 0.58 from 0.34 (including origination fee) for 80 percent LTV loans. The effective rate decreased 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.