MBA: Mortgage applications rebound after rates return to near 3-year low

Mortgage & Real Estate

Last week, mortgage rates retreated after experiencing the highest one-week increase in nearly a year. As the rate returned to a low of 3.64%, the Mortgage Bankers Association indicates the nation’s borrowers took to the market, increasing mortgage applications by 8.1%.

According to MBA’s Weekly Applications Survey, on an unadjusted basis, the index rose 8.1% for the week ending on Sept. 27, 2019.

“Mortgage rates mostly decreased last week, with the 30-year fixed rate dropping below 4% for the sixth time in the past nine weeks,” said Joel Kan, MBA’s vice president of economic and industry forecasting. “Borrowers responded to these lower rates, leading to a 14% increase in refinance applications.”

This means that the Refinance Index is now 133% higher than the same time period in 2018.

“Although refinance activity slowed in
September compared to August, the months together were the strongest since
October 2016,” Kan said. “The slight changes in rates are still causing large
swings in refinance volume, and we expect this sensitivity to persist.”

When it comes to the purchase market, Kan said the housing market’s healthy fundamentals continue to support solid levels of purchase activity.

This week, the unadjusted Purchase
Index increased 1% from a week ago, remaining 10% higher than the same week a
year ago. Additionally, the seasonally adjusted Purchase Index also grew 1%
from the week before.

Here is a more detailed breakdown
of this week’s mortgage application data:

The refinance share of mortgage activity increased to 58% from last week’s 54.9%.The adjustable-rate mortgage share of activity rose to 5.5% of total applications.The Federal Housing Administration’s share of mortgage apps moved backward to 10.4% from last week’s 11.4%.The Department of Veterans Affairs share of applications fell to 12.4% from last week’s 13.1%.The Department of Agriculture’s share of total applications grew from week’s 0.5% to 0.6%.Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) fell from last week’s rate of 4.02% to 3.99%.The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) declined from last week’s 4% to 3.98%.The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.79% from last week’s 3.9%.The average contract interest rate for 15-year fixed-rate mortgages fell from last week’s 3.46% to 3.43%.The average contract interest rate for 5/1 ARMs moved forward to 3.42% from last week’s 3.39%.