Mortgage application volume declined for the third consecutive week during the period ended August 30. The Mortgage Bankers Association said its Market Composite Index, a measure of that volume, was down 3.1 percent on a seasonally adjusted basis from the week ended August 23 and was 4.0 percent lower before adjustment.
Refinancing slacked off for the second week. That index was down 7 percent but remains elevated compared to the same week in 2018, a 152 percent edge. The share of applications that was for refinancing was 60.4 percent, down from 62.4 percent the prior week.
Purchase mortgage volume does appear to be responding to declining mortgage interest rates, rising for the first time in three weeks. The Purchase Index was 4.0 percent higher than the prior week on an adjusted basis and 1 percent higher unadjusted. Purchase applications were 5 percent higher than during the comparable week in 2018.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Ongoing trade tensions between the U.S. and China led to volatile, yet declining Treasury rates last week, causing the 30-year fixed mortgage rate to fall to 3.87 percent, its lowest level since November 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Despite lower borrowing costs, refinances were down from its recent peak two weeks ago, but still remained over 150 percent higher than last August, when rates were almost a percentage point higher."
Added Kan, "Purchase applications increased 1 percent last week and were 5 percent higher than a year ago. Consumers continue to act on these lower rates, but the volatility in the market is likely leading some borrowers to pause refinancing and buying decisions."
The FHA share of total applications decreased to 10.2 percent from 10.5 percent the previous week while the VA share increased to 11.3 percent from 9.9 percent. The USDA share of total applications ticked up to 0.6 percent from 0.5 percent.
The average loan size during the week was $335,300. Purchase mortgages averaged $321,100.
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 decreased to 3.87 percent from 3.94 percent. Points declined to 0.34 from 0.38 and the effective rate moved lower..
The average contract interest rate for jumbo 30-year FRM, loans with balances higher than the conforming limit, increased to 3.94 percent from 3.89 percent. Points dropped to 0.24 from 0.26 and the effective rate increased from last week.
Both contract and effective rates for 30-year FRM backed by the FHA were unchanged last week. The contract rate remained at 3.80 percent although points ticked down to 0.32 from 0.33.
Fifteen-year FRM had an average contract rate of 3.29 percent with 0.32 point. The prior week that rate was 3.31 percent with 0.33 point. The effective rate was also lower.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.40 percent from 3.42 percent. Points fell to 0.27 from 0.39 and the effective rate declined. ARMs had a market share of 5.7 percent, down from 6.1 percent the prior week.
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.
