Mortgage Applications Bouncing Back


Mortgage rates remained largely flat or
even slightly lower during the week ended November 30.  This probably helped to maintain the upward
in mortgage applications that began the previous week during the
Thanksgiving holiday and despite a shortened work week.

The Mortgage Bankers Association (MBA)
said its market Composite Index, a measure of loan application volume, moved up
2 percent on a seasonally adjusted basis and after an adjustment to the prior
week’s report to account for the holiday.  
On a non-adjusted basis, applications shot up 42 percent.

The seasonally adjusted Purchase Index
extended its increases to a third week, rising 1 percent from the week ended
November 23.  The unadjusted index was up
36 percent and was 0.2 percent higher than the same week in 2017.

The Refinance Index rose by 6 percent from
the prior week, but more notably the share of refinancing increased from 37.9
percent of total applications to 40.4 percent, the largest since March.

“Treasury rates continued to slide last
week, driven mainly by concerns over slowing global economic growth and U.S.
and China trade uncertainty. The 30-year fixed-rate fell for the third week in
a row to 5.08 percent and has declined a total of nine basis points over this
span,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting. “Application activity increased over the week for both purchase
and refinance loans, and were 10 percent and 7 percent higher, respectively,
than the week before the Thanksgiving holiday. Additionally, we saw a decrease
in the average loan size for purchase applications to the lowest since December
2017 ($298,000 from $313,000). This is perhaps an indication that there are
fewer jumbo borrowers, or maybe first-time buyers are having better success
reaching the market as we close out the year.” 
The average size for all loans also declined, from $294,500 to $284,200.

The share of FHA loan applications increased
to 10.2 percent of the total from 9.6 percent the prior week and the VA share
ticked up to 10.0 percent from 9.9 percent.  The USDA portion dipped to 0.6 percent from 0.7
percent the previous week.

As Kan indicated, the average contract
interest rate for 30-year fixed-rate mortgages (FRM) with origination balances
at or below the conforming loan limit of $453,100 decreased to 5.08 percent
from 5.12 percent.  Points declined to
0.44 from 0.46 and the effective rate was also lower.  However, the rate for jumbo loans, those with
balances above the conforming limit, increased slightly, from 4.88 percent to
4.89 percent.  Points moved down to 0.30
from 0.31 and the effective rate remained at the previous week’s level.

The average contract interest rate for
30-year FRM backed by the FHA dropped to 5.05 percent from 5.11 percent, with
points decreasing to 0.62 from 0.63. The effective rate moved lower.  

Fifteen-year FRM saw an average decline in
the contract rate of 3 basis points to 4.50 percent.  Points increased to 0.60 from 0.51 so that effective
rate was unchanged.  

The average contract interest rate for 5/1
rate mortgages (ARMs) increased to 4.33 percent from 4.29 percent,
with points decreasing to 0.21 from 0.42. The effective rate decreased from
last week. The adjustable-rate mortgage (ARM) share of activity fell to 7.4
percent of total applications from a recent high of 7.9 percent the previous

MBA’s Weekly Mortgage Applications Survey
has been conducted since 1990 and covers over 75 percent of all U.S. retail
residential mortgage 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.

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