Mortgage Application Volume Ignores Holiday, Purchases Make Strong Showing

Despite the Independence Day holiday which both shortened and bisected the week, mortgage activity rallied significantly during the week ended July 6.  The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage application volume, increased 2.5 percent on a seasonally adjusted basis compared to the week ended June 30.  The holiday did take a toll on the unadjusted numbers with the overall index dropping 18 percent.

The week's results were driven by strong growth in the volume of purchase mortgage applications. That index was up 7 percent from the previous week on a seasonally adjusted basis although it declined 15 percent unadjusted. The unadjusted index was 8 percent higher than during the same week in 2017.

The Refinance Index lost another 4 percent, falling to its lowest level since December 2000. The refinancing share also established a new recent low, declining to 34.8 percent of total applications, the smallest since August 2008. The previous week the share was 37.2 percent.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

FHA applications accounted for 10.0 percent of the total submitted during the week compared to 10.2 percent the previous week while VA applications increased to 11.3 percent from 10.7 percent. The USDA share of total applications was unchanged at 0.8 percent.  

Interest rates, both contract and effective, declined again for most fixed rate mortgages (FRMs).  The exception was the FHA backed 30-year FRM. That rate increased from 4.78 percent with 0.73 point to 4.80 percent with 0.74 point. The effective rate also increased.  

The average contract interest rate for 30-year FRMs with origination balances under the conforming limit of $453,100 fell to 4.76 percent from 4.79 percent.  Points increased to 0.43 from  0.41 and the effective rate moved lower.

The contract rate for jumbo 30-year FRM, loans with balances exceeding the conforming limit, averaged 4.68 percent compared to 4.71 percent the previous week.  Points dropped from 0.43 to 0.24 and the effective rate decreased. 

Rates for 15-year FRM were down week-over-week by 4 basis points to an average of 4.18 percent.  Points ticked down to 0.46 from 0.47 and the effective also decreased.

The contract interest rate for 5/1 ARMs increased to its highest level since MBA started tracking the product in January 2011.  The average rate surged by 10 basis points to 4.13 percent, further closing the gap with longer term fixed rates. Points increased to 0.36 from 0.25 and the effective rate also moved higher.  The ARM share of mortgage applications retreated from 6.7 percent to 6.3 percent.

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.