Mortgage Applications Down Again in MBA Weekly Survey

MBA NewsLink Staff

May 01, 2019

Mortgage applications fell for the fourth straight week even as interest rates dropped, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending April 26.

The Market Composite Index decreased by 4.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent compared to the previous week.

The unadjusted Refinance Index decreased by 5 percent from the previous week. The refinance share of mortgage activity decreased to 38.8 percent of total applications from 39.4 percent the previous week.

The seasonally adjusted Purchase Index decreased by 4 percent from one week earlier. The unadjusted Purchase Index decreased by 3 percent compared to the previous week and was 1 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.5 percent from 9.9 percent the week prior. The VA share of total applications decreased to 10.9 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 were lower last week, with the 30-year fixed rate declining to 4.42 percent, as concerns over global growth, particularly in Germany, outweighed more positive domestic news on first quarter GDP growth and business investment," said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. "Applications to refinance and purchase a home both fell, but purchase activity still remained slightly above year ago levels. The drop in refinances were driven by fewer FHA and VA loan applications, which typically lag the movement of conventional loans."

Kan noted the adjustable-rate mortgage share of applications decreased to 6.2 percent, its lowest share since August 2018. "So far in 2019, we continue to see a preference for 7/1 ARMs, which account for around 36 percent of all ARM applications, followed by 10/1 and 5/1 ARMs," he said.  "This is another indication that the few borrowers who choose to apply for ARM loans are electing to reap the benefit of lower rates, as well as some rate stability."

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.42 percent from 4.46 percent, with points increasing to 0.46 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) 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 4.31 percent from 4.35 percent, with points decreasing to 0.23 from 0.25 (including the 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 the FHA decreased to 4.39 percent from 4.49 percent, with points decreasing to 0.47 from 0.57 (including the 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 3.81 percent from 3.87 percent, with points decreasing to 0.40 from 0.44 (including the 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 3.81 percent from 3.92 percent, with points increasing to 0.54 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 6.2 percent of total applications, the lowest rate since August 2018.

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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