Applications Down in MBA Weekly Survey

MBA NewsLink Staff

July 12, 2017

Mortgage applications fell sharply from one week earlier as key interest rates edged up, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 7.

This week's results include an adjustment for the Fourth of July holiday.

The Market Composite Index decreased by 7.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 26 percent compared to the previous week.

The Refinance Index decreased by 13 percent from the previous week to the lowest level since January. The refinance share of mortgage activity decreased to 42.1 percent of total applications from 44.9 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 22 percent compared to the previous week and was 3 percent higher than the same week one year ago.

The FHA share of total applications increased to 10.4 percent from 10.2 percent the week prior. The VA share of total applications increased to 11.5 percent from 10.3 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

"Rates continued to increase last week, given increasing evidence that the Fed and other central banks are more likely to raise rates given the pickup in economic growth in their respective economies," said MBA Chief Economist Mike Fratantoni. "Additionally, minutes from the June Federal Open Market Committee meeting showed clear plans to start reducing the size and scope of the Fed's balance sheet and to continue raising the fed funds rate, a signal of confidence in the US economy and job market. On this news, the U.S. 10-year Treasury yield has increased 18 basis points over the past month, and mortgage rates are back to their highest level since May."

Fratantoni noted the MBA refinance index hit its highest level of 2017 in mid-June, which also corresponded to when the 30-year fixed mortgage rate was at its lowest level for the year. Since then, mortgage rates have increased 9 basis points and the refinance index has declined by more than 20 percent to its lowest level since the beginning of the year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.22 percent from 4.20 percent, with points increasing to 0.40 from 0.31 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.19 percent from 4.10 percent, with points increasing to 0.30 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 4.12 percent from 4.04 percent, with points increasing to 0.40 from 0.33 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.50 percent from 3.43 percent, with points increasing to 0.45 from 0.32 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 3.32 percent from 3.37 percent, with points increasing to 0.31 from 0.22 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 6.7 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

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