Mortgage Applications Decrease in MBA Weekly Survey

Mortgage applications fell last week even as key interest rates held at record lows, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 19.

The Market Composite Index decreased by 8.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 9 percent compared to the previous week.

The unadjusted Refinance Index decreased by 12 percent from the previous week but was 76 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 61.3 percent of total applications from 63.2 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 4 percent compared to the previous week and was 18 percent higher than the same week one year ago.

The FHA share of total applications increased to 11.4 percent from 11.0 percent the week prior. The VA share of total applications decreased to 11.0 percent from 11.5 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

“Refinance applications dropped to their lowest level in three weeks, but the index remained 76 percent higher than a year ago,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite the decline last week, MBA still anticipates refinance originations to increase to $1.35 trillion in 2020 – the highest level since 2012.”

Kan noted even with high unemployment and economic uncertainty, the purchase market remains strong. “Activity has climbed above year-ago levels for five straight weeks and was 18 percent higher than a year ago last week. One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market. Additional housing inventory is needed to give buyers more options and to keep home prices from rising too fast.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.30 percent, with points increasing to 0.32 from 0.29 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.62 percent from 3.67 percent, with points increasing to 0.29 from 0.28 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.35 percent from 3.33 percent, with points decreasing to 0.22 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.81 percent from 2.80 percent, with points increasing to 0.30 from 0.28 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to 3.09 percent from 3.07 percent, with points decreasing to 0.01 from 0.29 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 3.1 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

Posted on newslink.mba.org on 6/23/2020.