Apps decreased despite lower rates MBA reported
Lower mortgage rates were not enough to encourage potential homebuyers to arrange a home loan last week.
The Weekly Mortgage Applications Survey from the Mortgage Bankers Association shows a 3.7% decrease in applications (seasonally adjusted) as economic concerns dissuaded buyers.
Applications were down 4% on an unadjusted basis compared to the previous week.
The Purchase Index fell 6% on both an unadjusted and a seasonally adjusted basis; while the Refinance Index dropped 0.1% from the previous week.
"Application activity fell last week - even with rates decreasing - as renewed uncertainty about the domestic and global economy likely held potential homebuyers off the market," said Joel Kan, MBA's Associate Vice President of Industry Surveys and Forecasts. "Despite the recent decline in applications, we still expect that the continued strength of the job market and lower rates will support more purchase activity in the coming months."
The 30-year fixed-rate mortgage rate was at its lowest since March 2018 and 52 basis points below the most recent high of November 2018.
The refinance share of mortgage activity increased to 43.2% of total applications from 41.6% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5% of total applications.
Government-backed refinances increased
“Government refinances provided a bright spark, picking up over 10%, as both FHA and VA refinancing activity saw increases over the week," Kan noted.
The FHA share of total applications increased to 11.0% from 10.5% the week prior; the VA share of total applications increased to 11.0% from 10.0%; and the USDA share of total applications increased to 0.6% from 0.5%.
Average contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.65% from 4.69%, with points decreasing to 0.43 from 0.45 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 4.48% from 4.50%, with points decreasing to 0.27 from 0.28 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.61% from 4.70%, with points decreasing to 0.53 from 0.57 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.04% from 4.11%, with points increasing to 0.48 from 0.47 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.97% from 4.04%, with points increasing to 0.42 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
