It was another mediocre week for mortgage applications. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan applications volume, was down 1.9 percent on a seasonally adjusted basis during the week ended July 19, its fourth consecutive loss. The Index was also lower than the previous week on an unadjusted basis, down 2.0 percent.
The Refinance Index decreased 2 percent from the previous week but remained 81 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 49.8 percent of total applications from 50.0 percent the previous week.
Applications for home purchase financing also declined. The Purchase Index was 2 percent lower on a seasonally adjusted basis and 1 percent lower unadjusted. The index was still higher than during the same week in 2018, a 6 percent spread.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Mortgage applications were down last week, even as rates moved lower across the board, with the 30year fixed rate at 4.08 percent. Refinance activity was lower, but we did see government refinance applications increase, driven solely by a 12 percent rise in FHA applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Mortgage rates right now are comparable to the average rate of 4.10 percent for June, but refinances last week were 7 percent lower than last month. This is an indication that as we see rates lower for longer, borrowers need more of a drop in rates to consider refinancing."
Added Kan, "Purchase applications decreased for the second straight week and have been somewhat volatile lately, but were still 6 percent higher than a year ago."
The FHA share of total applications increased to 11.3 percent from 10.6 percent the previous week and the VA share rose to 13.1 percent from 12.9 percent. The USDA share was unchanged at 0.6 percent.
Both contract and effective interest rates declined for all mortgage products compared to their rates during the week ended July 12. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $484,350 fell to 4.08 percent from 4.12 percent with points decreasing to 0.33 from 0.38.
The jumbo version of the 30-year FRM, loans with balances greater than the conforming limit, had a rate of 4.04 percent with 0.25 point. The previous week the rate was 4.07 percent with 0.21 point.
The average contract interest rate for 30-year FRM backed by the FHA dipped by 3 basis points to 3.98 percent. Points increased to 0.31 from 0.28.
Fifteen-year FRM had an average contract rate of 3.45 percent compared to 3.48 the prior week. Points were unchanged at 0.32.
The contract rate for the 5/1 adjustable rate mortgage (ARM) ticked down 1 basis point to 3.57 percent and points were unchanged at 0.27. The ARM share of activity continues to shrink, accounting for a 4.7 percent share of total applications last week rather than the 4.9 percent a week earlier..
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.
