Mortgage Applications: Volumes Ignore Holiday With 5.5% Increase

Even though the week was shortened by the Thanksgiving holiday MBA's Market Composite Index, a measure of mortgage application volume, managed a 5.5 percent increase on a seasonally adjusted basis.  While the index was adjusted to account for the holiday, it was the largest increase since the week ended January 8, a period which followed a protracted holiday period. On an unadjusted basis the index dropped by 29 percent. 

The increase was driven by a large gain in the seasonally adjusted Purchase Index which rose 9 percent. The unadjusted index was down by 28 percent but was 2 percent higher than the same week in 2017, also a holiday shortened week.  The Refinancing Index was up 1.0 percent and the refinance share of mortgage activity decreased to 37.9 percent of total applications from 38.5 percent the previous week.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

"After several weeks of market volatility, 30-year fixed mortgage rates decreased four basis points to 5.12 percent last week," Mike Fratantoni, MBA's Chief Economist said.  "Homebuyers responded, with purchase applications 1.7 percent higher than a year ago, and after adjusting for the Thanksgiving holiday, they increased almost 9 percent from the previous week.  The rise in purchase activity was led by conventional purchase applications, which surged almost 12 percent, while government purchases were essentially unchanged over the week. This also pushed the average loan size for purchase applications higher, which likely meant there were fewer first-time homebuyers in the market last week." 

Added Fratantoni, "Refinance activity increased slightly overall, driven by conventional refinances, while government refinances decreased, as both FHA and VA applications dropped over the past week."   

As Fratantoni indicated, the average purchase loan size rose from $307,700 to $313,100.  The size of all loans was also higher, $294.500 compared to $289,500 the prior week.

The 12 percent increase in conventional purchase applications served to realign the distribution of other product types.  The FHA share dropped from 10.7 percent to 9.6 percent and the VA share to 9.9 percent from 10.6 percent.  The USDA share was unchanged at 0.7 percent.  

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances at or below the conforming limit of $453,100 decreased to 5.12 percent from 5.16 percent, with points dipping from 0.48 to 0.46.  The effective rate declined as well.   

The rate for jumbo 30-year FRM, loans with origination balances higher than the conforming rate, was unchanged at 4.88 percent. Points increased to 0.31 from 0.29 and the effective rate was unchanged.

The interest rate for 30-year FRM fixed-rate mortgages backed by the FHA increased to 5.11 percent from 5.08 percent. Points were unchanged at 0.63 and the effective rate was higher.

Both rates and points were unchanged for the 15-year FRM at 4.53 percent with 0.51 point. The effective rate moved lower.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 4.29 percent from 4.24 percent, with points decreasing to 0.42 from 0.51.  The effective rate increased from the previous week.  The adjustable-rate mortgage (ARM) share of activity increased to 7.9 percent of total 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.