Mortgage Applications Jump in MBA Weekly Survey

MBA NewsLink Staff

June 12, 2019

Mortgage applications jumped sharply coming off the holiday-shortened Memorial Day holiday week, buoyed by the lowest 30-year fixed interest rates since September 2017, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending June 7.

The results for the week ending May 31 included an adjustment for the Memorial Day holiday.

The Market Composite Index increased by 26.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 38 percent compared to the previous week.

The unadjusted Refinance Index increased by 47 percent from the previous week to its highest level since 2016. The refinance share of mortgage activity increased to 49.8 percent of total applications from 42.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 10 percent from one week earlier. The unadjusted Purchase Index increased by 20 percent compared to the previous week and was 10 percent higher than the same week one year ago.

The FHA share of total applications decreased to 8.9 percent from 9.5 percent the week prior. The VA share of total applications decreased to 11.0 percent from 11.3 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

"Mortgage rates for all loan types fell by a sizeable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials and weaker than expected hiring in May," said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. "Despite the less positive outlook, both purchase and refinance applications surged, driven mainly by these lower rates."

Kan noted with the 30-year fixed-rate mortgage at a nearly two-year low, purchase activity was more than 10 percent higher than a year ago. "Demand is still relatively strong, but there is likely some restraint from prospective buyers, driven by some economic uncertainty," he said. "Furthermore, housing supply is still very tight for first-time buyers."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.12 percent from 4.23 percent, with points unchanged at 0.33 (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 $484,350) decreased to 4.04 percent from 4.09 percent, with points decreasing to 0.17 from 0.21 (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 4.09 percent from 4.24 percent, with points decreasing to 0.26 from 0.33 (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 3.53 percent from 3.65 percent, with points decreasing to 0.32 from 0.36 (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 3.43 percent from 3.62 percent, with points increasing to 0.32 from 0.19 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 7.9 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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