Applications Up in Holiday-Shortened Week

MBA NewsLink Staff

January 10, 2018

Mortgage applications jumped last week to start the new year as key interest rates rose slightly, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending Jan. 5.

The week's results included an adjustment for the New Year's holiday. Results for the previous week ending Dec. 29 were revised.

The Market Composite Index increased by 8.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 46 percent compared to the previous week.

The Refinance Index increased by 11 percent from the previous week. The refinance share of mortgage activity increased to 52.9 percent of total applications from 52.1 percent the previous week.

The seasonally adjusted Purchase Index increased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 44 percent compared to the previous week and was 1 percent lower than the same week one year ago.

The FHA share of total applications increased to 11.1 percent from 10.8 percent the week prior. The VA share of total applications remained unchanged from the week prior at 11.4 percent. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

"Overall, application activity increased last week after accounting for the New Year's Day holiday, taking us back to levels of activity last seen in early December, both in terms of purchase and refinance applications," said MBA Economist Joel Kan.. "This was likely a catch-up week for potential borrowers as we head into the new year."

Kan noted rates were slightly higher after a week of mixed economic news, which pushed the 30-year fixed rate up one basis point. "For example, the ISM's non-manufacturing index showed that growth in the services sector was down for the second month and the BLS' December jobs report was weaker than expected," he said. "However, these were partially offset by slightly stronger factory orders for November and continued optimism of positive impacts from the tax reform plan."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.23 percent from 4.22 percent, with points decreasing to 0.35 from 0.37 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.16 percent from 4.14 percent, with points increasing to 0.23 from 0.22 (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 decreased to 4.16 percent from 4.17 percent, with points increasing to 0.42 from 0.40 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.66 percent from 3.64 percent, with points increasing to 0.42 from 0.34 (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 3.50 percent from 3.53 percent, with points decreasing to 0.51 from 0.53 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 5.0 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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