Mortgage Application Volume Falls Back into Old Pattern

The sharp uptick in mortgage applications during the week ended June 15 was short lived.  The Mortgage Bankers Association (MBA) reported a strong reversal last week which nearly wiped out that 5.1 percent increase in the Market Composite Index, a measure of mortgage loan application volume, The 4.9 percent loss in the seasonally adjusted index during the week ended June 22 put it back on the downward glide path it has pursued since the beginning of the year. Volume fell by 6 percent on an unadjusted basis.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Purchase mortgage volume was even harder hit, decreasing 6 percent on a seasonally adjusted based and 7 percent unadjusted. Purchase mortgage activity did retain a 1 percent increase from the same week in 2017.

After rising 6.0 percent the previous week, refinancing fell back by 4.0 percent. Due to the larger decline in purchase applications however, the share of total mortgage applications that were for refinancing increased to 37.6 percent from 36.8 percent.

The distribution of applications across product types shifted slightly with the FHA share ticking up to 10.2 percent from 10.1 percent and the USDA share rising to 0.8 percent from 0.7 percent. The VA share moved up a half point to 10.7 percent.

The direction of contract interest rates was mixed, although most moved lower.  There were substantial decreases in the points charged for all loan types which pushed all effective rates lower when compared to the previous week.  Thirty-year fixed-rate mortgages (FRM) with origination balances at or under the conforming loan limit of $453,100 had an average contract rate of 4.84 percent, up from 4.83 percent.  Points declined to 0.42 from  0.48.

Thirty-year FRM with jumbo loan balances higher than the conforming limit had a contract rate of 4.70 percent, down from 4.79 percent a week prior. Points dropped from 0.36 to 0.26.    

The average contract interest rate for 30-year FRM backed by the FHA decreased to 4.81 percent from 4.82 percent. Points fell by 15 basis points to 69.  

The average contract rate for 15-year FRM increased to 4.29 percent from 4.27 percent. Points declined to 0.40 from 0.53.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) fell back by 4 basis points to an average of 4.01 percent while points dropped to 0.41 from 0.54.  The share of applications that were for ARMs declined from 7.0 percent to 6.5 percent.

The 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.  Base period and value for all indexes is March 16, 1990=100.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage 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.