Applications Rise (Finally) in MBA Weekly Survey

MBA NewsLink Staff

June 06, 2018

After eight consecutive weeks of decreases, mortgage applications increased by more than 4 percent last week as key interest rates dropped sharply, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 1.

The week's results included an adjustment for the Memorial Day holiday.

The Market Composite Index increased by 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 7 percent compared to the previous week.

The Refinance Index increased by 4 percent from the previous week. The refinance share of mortgage activity increased to 35.6 percent of total applications from 35.3 percent the previous week.

The seasonally adjusted Purchase Index increased by 4 percent from one week earlier. The unadjusted Purchase Index decreased by 8 percent compared to the previous week and was 9 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.7 percent from 9.9 percent the week prior. The VA share of total applications increased to 10.1 percent from 9.9 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

"Refinance applications had fallen for the previous six weeks before this 3.8 percent increase which includes an adjustment for the Memorial Day holiday," said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. "While the level of refi activity remains historically low, the reprieve in rate increases may have stopped the slide. Purchase applications increased over the week and were 9 percent higher than the same week a year ago, a sign that despite tight housing inventory, purchase activity in 2018 remains stronger than in 2017."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.75 percent from 4.84 percent, with points decreasing to 0.46 from 0.47 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

"Concerns over Italy's political turmoil, and questions about the possible imposition of trade tariffs by the U.S. on its major trade partners, pushed treasury rates lower this week," Kan said.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.70 percent from 4.73 percent, with points decreasing to 0.35 from 0.36 (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 decreased to 4.77 percent from 4.85 percent, with points decreasing to 0.70 from 0.88 (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 decreased to 4.21 percent from 4.24 percent, with points decreasing to 0.50 from 0.51 (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 decreased to 4.08 percent from 4.11 percent, with points decreasing to 0.41 from 0.62 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 7.1 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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