Mortgage Applications Down for 3rd Straight Week in MBA Weekly Survey

Mortgage applications fell for the third straight week even as interest rates dipped again, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending August 28. 

The Market Composite Index decreased by 2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent compared to the previous week.

The unadjusted Refinance Index decreased by 3 percent from the previous week but was 40 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 62.5 percent of total applications from 62.6 percent the previous week.

The seasonally adjusted Purchase Index decreased by 0.2 percent from one week earlier. The unadjusted Purchase Index decreased by 3 percent compared to the previous week and was 28 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.2 percent from 10.5 percent the week prior. The VA share of total applications decreased to 11.4 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

“Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates.

Kan noted purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago – the 15th straight week of year-over-year increases. “Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.08 percent from 3.11 percent, with points decreasing to 0.36 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) remained unchanged at 3.41 percent, with points increasing to 0.38 from 0.35 (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 3.19 percent from 3.16 percent, with points increasing to 0.34 from 0.29 (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 decreased to 2.67 percent from 2.70 percent, with points decreasing to 0.36 from 0.39 (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 3.08 percent from 3.14 percent, with points increasing to 0.43 from 0.42 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity remained unchanged at 2.6 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.