Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 5.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (“MBA”) Weekly Mortgage Applications Survey for the week ending December 14, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 10 percent compared with the previous week and was 2 percent higher than the same week one year ago.

“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications decreased almost seven percent over the week and refinances decreased around two percent, led by a larger decline in government refinances compared to conventional refinances.”

Added Kan, “With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action. The average loan balance for refinance loans increased to its highest level since September 2017.”

The refinance share of mortgage activity increased to 43.5 percent of total applications, its highest level since February 2018, from 41.5 percent the previous week. The adjustable-rate mortgage (“ARM”) share of activity increased to 7.9 percent of total applications.

The FHA share of total applications decreased to 10.4 percent from 10.8 percent the week prior. The VA share of total applications decreased to 9.9 percent from 10.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to its lowest level since September 2018, 4.94 percent, from 4.96 percent, with points decreasing to 0.43 from 0.48 (including the origination fee) for 80 percent loan-to-value ratio (“LTV”) 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 $453,100) decreased to its lowest level since September 2018, 4.74 percent, from 4.80 percent, with points decreasing to 0.26 from 0.33 (including the 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 the FHA decreased to its lowest level since September 2018, 4.95 percent, from 4.97 percent, with points decreasing to 0.51 from 0.55 (including the 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 its lowest level since September 2018, 4.37 percent, from 4.41 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to its lowest level since September 2018, 4.17 percent, from 4.24 percent, with points increasing to 0.42 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

Please Note: MBA Offices will be closed Monday, December 24, 2018 and will reopen on Wednesday, January 2, 2019. Results for the week ending December 21, 2018 will not be released on December 26, 2018. Release of the survey will resume on Thursday, January 3, 2019 at 7:00 a.m. with results for the two weeks prior.

Contact:

Adam DeSanctis – adesanctis@mba.org – (202) 557-2727

Source: Mortgage Bankers Association