Mortgage Apps Pull Back From Multi-Year Highs

Mortgage application volume as measured by the Mortgage Bankers Association's (MBA) Market Composite Index fell 7.1 percent during the week ended June 22. The change was the same for both seasonally adjusted and unadjusted data.  Responses to MBA's Weekly Mortgage Applications Survey send the Refinance Index down 8 percent from the week ended June 15 and the refinancing share of mortgage activity decreased from 80 percent of total applications to 79 percent.  The seasonally adjusted Purchase Index was down 1 percent from a week earlier while the unadjusted index decreased 2 percent week-over-week and 3 percent from a year earlier.

"Refinance volume fell last week due largely to a fall-off in refinance applications for government loans, which had more than doubled the prior week," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "The large swings in activity were due to the implementation of FHA's new premiums on streamline refinances, and borrowers timing their applications to lower their premiums."

"The decline in the refi index isn't particularly troubling considering the past two weeks saw the highest levels since early 2009," says Mortgage News Daily's Matthew Graham.  "The pop higher in apps was fueled not only by the drop in FHA MIPs on June 11th, but also by fresh record low rates, as well as the announcements by several big box lenders that they'd no longer be accepting open access (or "different servicer") streamline applications.  These factors not only helped concentrate application volume in the previous two cycles, but the pull-back in open access availability likely weighs on the current cycle as it raised new hurdles for some borrowers, or at the very least, decreased the market's overall capacity to churn out streamlines.  Bottom line: this week's drop makes sense."

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Interest rates were mixed.  The contract rate for the most popular product, the conforming (loan balance of $417,500 or less) 30-year fixed-rate mortgage (FRM)   Jumbo 30-year FRM, (balances over $417,500) increased to 4.12 percent with 0.35 point from 4.06 percent with 0.38 point and the effective rate increased as well.   

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent from 3.25 percent, with points decreasing to 0.44 from 0.45. The effective rate decreased from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71 percent from 3.72 percent, with points decreasing to 0.46 from 0.47. The affective rate decreased.

Adjustable rate mortgages (ARMs) had a 4 percent share of mortgage applications filed during the week.  The average contract interest rate for 5/1 ARMs increased to 2.81 percent from 2.75 percent, with points increasing to 0.41 from 0.33. The effective rate increased from last week.

All interest rates quoted are for loans with an 80 percent loan-to-value ratio and points include the origination fee. 

 MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  The base period and value for all indexes is March 16, 1990+100.