Mortgage Application Volume Takes Back Some of May’s Gains

News

Mortgage
application volume declined during the week ended May 24, more than reversing a
2.4 percent increase a week earlier.  Both
refinancing and purchase activity moved lower.

The Mortgage
Bankers Association said its Market Composite Index which tracks the level of
mortgage loan applications, was down 4.0 percent on a non-seasonally adjusted basis
and 3.3 percent after it.    

The Refinance
Index
which had surged by 8 percent during the week ended May 17 gave back much
of that increase this past week, falling by 6 percent.  Refinance applications accounted for 39.7
percent of the total volume, down from 40.5 percent the previous week.

The seasonally
adjusted Purchase Index
dipped 1 percent and the unadjusted Purchase Index was
down 3 percent. The unadjusted version remained 7 percent higher than during the
corresponding week in 2018, as it had in each of the previous two weeks.

 

Refi Index vs 30yr Fixed

 

 

Purchase Index vs 30yr Fixed

 

 

 

 

“Concerns over
European economic growth and ongoing uncertainty about a trade war with China
were some of the main factors that kept mortgage rates low last week. Even with
lower rates on three of the five surveyed loan types, refinance activity fell 6
percent, essentially reversing an 8 percent increase the week before,” said
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Purchase applications decreased for the third straight week, but remained more
than 7 percent higher than a year ago. It is possible that the trade dispute is
causing potential homeowners to hold off on buying, with the fear that further
escalation – or the lack of resolution – may have adverse impacts on the
economy and housing market.” 

The FHA share of
total applications
ticked up to 9.6 percent from 9.4 percent the previous week
and the VA share was 11.2 percent compared to 11.0 percent. The USDA share of
total applications broke free of its long-standing 0.6 percent rut, rising to
0.7 percent.   

The dip in
applications came despite another week of declining rates. Contract and
effective rates were lower or flat for all fixed-rate mortgage products, but
jumped significantly for those with adjustable rates.   

The average
contract interest rate
for 30-year fixed-rate mortgages (FRM) with origination
balances at or below the conforming limit of $484,350 was unchanged from 4.33
percent.  Points decreased 0.42 from 0.43.

Thirty-year jumbo FRM,
loans with balances exceeding the conforming loan limit, had a contract rate 6
basis points lower than the prior week at 4.18 percent.  Points decreased to 0.23 from 0.35.

The rate for
30-year FRM backed by the FHA decreased to 4.33 percent with 0.43 point.  The previous week the rate was 4.34 percent with
0.47 point.

The average
contract interest rate for 15-year FRM decreased to 3.73 percent from 3.78
percent, with points remaining unchanged at 0.40.

The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to
3.74 percent from 3.57 percent. Points dipped to 0.34 from 0.37 and the
effective rate increased from the prior week.. 
The ARM share of activity decreased to 6.6 percent of total applications.  The previous week the share was 6.8 percent.

MBA’s
Weekly Mortgage Applications Survey been conducted since 1990 and covers over
75 percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks and thrifts.  Base period and value for
all indexes is March 16, 1990=100 and interest rate information is based on
loans with an 80 percent loan-to-value ratio and points that include the
origination fee.

 

Leave a Reply