Volume Steady as Rates Rise to 3-Month High

Mortgage applications managed a tiny increase during the week ended October 25 even as interest rates moved slightly higher.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier and 0.3 percent on an unadjusted basis

The Refinance Index decreased 1 percent on top of a 17 percent decline the prior week but was still 134 percent higher than the same week one year ago. The refinance share of mortgage applications declined to 58.0 percent of the total from 58.5 percent the previous week.

After three weeks of declines the Purchase Index grew by 2.0 percent earlier on both an adjusted and an unadjusted basis. The unadjusted index was 10 percent higher than during the same week in 2018.   

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

 "The 10-year Treasury rate rose slightly last week, as markets expected more progress toward a trade deal between the U.S. and China. Mortgage rates increased for the second straight week as a result, with the 30-year fixed-rate climbing to 4.05 percent - the highest level since the end of July," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Mortgage applications were mostly unchanged, with purchase activity rising 2 percent and refinances decreasing less than 1 percent. Purchase applications continued to run at a stronger pace than last year, finishing a robust 10 percent higher than a year ago. Considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains."

The FHA share of total applications dipped to 12.0 percent from 12.1 percent during the week ended October 18 and the VA share fell to 11.8 percent from 13.5 percent. Applications for USDA loans accounted for 0.6 percent of the total compared to 0.5 percent the prior week.  The average loan balance was $315,500 and purchase loans were at $331,100.

Interest rates were higher for all loan products on both a contract and an effective basis than during the prior week. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances at or below the conforming limit of $484,350 increased to 4.05 percent from 4.02 percent.  Points dipped to 0.37 from  0.38.

The rate for jumbo 30-year FRM, loans with origination balances that exceeded the conforming limit, climbed to 4.01 percent from 3.96 percent.  Points were unchanged at 0.30.

The average contract interest rate for 30-year FRM backed by the FHA increased to 3.83 percent from 3.79 percent,  Points grew to 0.28 from 0.26.

Fifteen-year FRM had an average rate of 3.40 percent with 0.36 point. The prior week the rate was 3.39 percent with 0.35 point.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.43 percent from 3.29 percent, with points decreasing to 0.23 from 0.35.  The ARM share of activity increased to 5.2 percent of total applications from 4.8 percent.

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