Purchase Apps Up as Refis Hit 18-Year Low in MBA Weekly Survey

MBA NewsLink Staff

July 11, 2018

Mortgage applications--or rather, purchase applications--increased last week as refinancings fell to their lowest level since 2000, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 6.

The week's results included an adjustment for the Fourth of July holiday.

The Market Composite Index increased by 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 18 percent compared to the previous week.

The (unadjusted) Refinance Index decreased by 4 percent from the previous week to its lowest level since December 2000. The refinance share of mortgage activity decreased to its lowest level since August 2008, 34.8 percent of total applications, from 37.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 7 percent from one week earlier. The unadjusted Purchase Index decreased by 15 percent compared to the previous week but was 8 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.0 percent from 10.2 percent the week prior. The VA share of total applications increased to 11.3 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

"The strong job market continues to bolster demand for homes, with purchase volume up 8 percent year over year, even as the lack of inventory still is holding back the pace of sales," said MBA Chief Economist Mike Fratantoni. "evertheless, the mix of business continues to move towards loans for home purchase."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.76 percent from 4.79 percent, with points increasing to 0.43 from 0.41 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.68 percent from 4.71 percent, with points decreasing to 0.24 from 0.43 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 4.80 percent from 4.78 percent, with points increasing to 0.75 from 0.73 (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 decreased to 4.18 percent from 4.22 percent, with points decreasing to 0.46 from 0.47 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages increased to its highest level in the history of the survey, 4.13 percent, from 4.03 percent, with points increasing to 0.36 from 0.25 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week. MBA began tracking interest rates on 5/1 ARMs in January 2011.

The ARM share of activity decreased to 6.3 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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