Mortgage applications returned to more normal levels during the week ended January 18 after two rather post-holiday periods. Both purchasing and refinancing were down from double digit levels and the Mortgage Bankers Association's (MBA) Market Composite Index gave back a small portion of the 37 percent in aggregate gains accumulated over the two previous weeks.
The composite, a measure of total application volume, declined 2.7 percent on a seasonally adjusted basis compared to the week ended January 11 and was down 0.3 percent on a non-adjusted basis. The Purchase Index dropped back by two points on an adjusted basis but did increase 4 percent on a non-adjusted basis and remained 13 percent ahead of the same week in 2018.
The Refinance Index declined by 5 percent and the share of applications that were for refinancing comprised 44.5 percent of the total. The share was 46.8 percent the previous week.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Mortgage application activity cooled off last week after two consecutive weeks of sizeable increases. Both purchase and refinance applications saw declines but remained at healthy levels, with the purchase index remaining close to a nine-year high, and the refinance index hovering near its highest level since last spring," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Reversing the recent downward trend, borrowers saw increasing rates for most loan types last week, as better-than-expected unemployment claims, easing trade tensions and stabilization in the equity markets ultimately led to a rise in Treasury rates."
The FHA share of total applications was 10.5 percent compared to 10.9 percent the previous week and the VA share dipped to 10.3 percent from 10.4 percent. USDA applications decreased to 0.4 percent from 0.5 percent. That the office processing USDA loans is affected by the partial government shutdown may account, in part, for that agency's exceptionally low market share. The average loan size was $314,500 and the purchase loan size was $308,500.
Mortgage rates, both contract and effective, were mixed. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $484,350 increased to 4.75 percent from 4.74 percent. Points dipped to 0.44 from 0.45 and the effective rate was unchanged.
The rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, increased to 4.59 percent from 4.53 percent, with points decreasing to 0.25 from 0.31. The effective rate moved lower.
The rate for 30-year FRM backed by the FHA increased 6 basis points to 4.82 percent. Points increased to 0.62 from 0.52 pushing the effective rate higher.
Fifteen-year FRM had an average rate of 4.12 percent with 0.53 point. The prior week the rate was 4.12 percent with 0.45 point. The effective rate also increased.
The average contract interest rate for 15-year FRM decreased to 4.12 percent from 4.13 percent, with points increasing to 0.53 from 0.45. The effective rate increased from last week.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 4.12 percent from 4.08 percent. Points increased to 0.42 from 0.32 and the effective rate was also higher. The ARM share of activity dropped to 8.3 percent of total applications from 9.2 percent a week earlier.
MBA's Weekly Mortgage Applications Survey has 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.
