After Brief Reprieve, Mortgage Apps Resume Downward Path

After posting the first across-the-board volume increases in almost a month during the week ended October 19, activity reversed last week, and the seasonally adjusted Market Composite Index declined 2.5 percent.  The index, produced by the Mortgage Bankers Association, lost 3 percent on an unadjusted basis.

The MBA's Refinance Index was down by 4 percent during the week ended October 26, the fourth negative report in the last five weeks, and the share of applications that were for refinancing decreased to 39.4 percent from 39.8 percent.   

Both the seasonally adjusted and the unadjusted Purchase Indices declined by 2 percent from the previous week and the unadjusted version was 0.4 percent below the level during the same week in 2017, the first year-over-year loss since August. The average size of a purchase mortgage loan was $309,200 and the origination balance of all loans averaged $291,400.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Application shares for FHA mortgages accounted for 10.3 percent of the total compared to 10.1 percent the prior week while VA applications fell from 10.1 percent of the total to 9.8 percent. The USDA share was unchanged at 0.7 percent.

Mortgage rates were mixed.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $453,100 were unchanged at 5.11 percent.  Points decreased to 0.50 from 0.52 and the effective rate decreased.

The average contract interest rate for jumbo 30-year FRM, those loans with origination balances higher than the conforming rate, dipped to 4.94 percent from 5.01 percent and points were unchanged at 0.28.  The effective rate moved lower.  

The average contract interest rate for 30-year FRM backed by the FHA ticked up one basis point to 5.08 percent and points increased to 0.62 from 0.61.  The effective rate also increased.  

Fifteen year FRM had an average contract rate of 3.55 percent, up from 4.50 percent the previous week.  Points fell to 0.51 from 0.55, but the effective rate was up.

Applications for adjustable rate mortgages (ARMS) claimed their highest market share since May 2017, 7.6 percent, compared to 7.0 percent the prior week as both contract and effective rates moved lower.  The average rate for 5/1 ARMs decreased to 4.33 percent with 0.42 point from 4.47 percent, with 0.37 point.  

Joel Kan, MBA's AVP of Industry and Surveys and Forecasts said, "The 30-year fixed-rate mortgage held steady over the week, but total applications decreased overall. Purchase applications inched backward from the previous week, as well as compared to one year ago - the first year-over-year decline in purchase activity since August.  Purchase applications may have been adversely impacted by the recent uptick in rates and the significant stock market volatility we have seen the past couple of weeks. Additionally, the ARM share of applications increased to its highest level since 2017, but since this is a compositional measure, it was driven by a greater decrease in applications for fixed-term loans relative to the decrease in ARM applications."

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.