Applications Down Again in MBA Weekly Survey

MBA NewsLink Staff

October 17, 2018

Mortgage applications decreased sharply from one week earlier as key interest rates moved higher above 5 percent, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending October 12.

This week's results did not include an adjustment for the Columbus Day holiday.

The Market Composite Index decreased by 7.1 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 (unadjusted) Refinance Index decreased by 9 percent from the previous week. The refinance share of mortgage activity decreased to 38.1 percent of total applications from 39.0 percent the previous week.

The seasonally adjusted Purchase Index decreased by 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared to the previous week and was 2 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.4 percent from 10.5 percent the week prior. The VA share of total applications increased to 10.4 percent from 10.0 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

"Mortgage applications were likely impacted by both the Columbus Day holiday and the increase in rates, as we saw declines in both purchase and refinance activity. However, it's important to note that purchase activity remained 2.5 percent higher than a year ago, which is in line with our forecast for gradual gains in purchase activity this year," said Joel Kan, MBA Associate Vice President of Industry Surveys and Forecasts. "Treasury rates increased over the week, mainly as communication from Federal Reserve officials pointed to a continued path of rate hikes, based on the strength of the economy and hot job market. This pushed the 30-year fixed-rate mortgage past the 5 percent mark, increasing 5 basis points to 5.10 percent. Furthermore, four out of the five rates tracked in our survey increased."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.10 percent, from 5.05 percent, with points increasing to 0.55 from 0.51 (including the 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 $453,100) decreased to 4.98 percent from 4.99 percent, with points decreasing to 0.34 from 0.35 (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 its highest level since April 2011, 4.99 percent, from 4.98 percent, with points increasing to 0.69 from 0.63 (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 its highest level since February 2011, 4.50 percent, from 4.44 percent, with points decreasing to 0.54 from 0.58 (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 increased to its highest level since the series began in 2011, 4.34 percent, from 4.29 percent, with points decreasing to 0.35 from 0.52 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased 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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