Mortgage Applications Stumble, Refi’s Remain Strong

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The mortgage
volume summary issued by the Mortgage Bankers Association for the week ended
December 15, and the last before its two-week Christmas hiatus, reports one of
the worst non-holiday related weeks in a long time. The volume of mortgage
applications, as measured by MBA’s Market Composite Index, was down
significantly from the previous week, and the Purchase Index eked out the
smallest year-over-year gain since mid-April.

The Composite
Index decreased 4.9 percent on a seasonally adjusted basis compared to the week
ended December 8, and was down 6 percent on an unadjusted basis.

The share of
applications that were for refinancing increased for the sixth time in the last
seven weeks, and was the highest share since December 2016, 53.9 percent.  The previous week’s share was 52.4 percent.  The Refinance Index however, declined by 3
percent.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

The seasonally
adjusted Purchase Index lost 6 percent and the unadjusted version was down 9
percent compared to the prior week, but the unadjusted index was 1 percent
higher than during the same week in 2016.

FHA-backed
loans
received 11.3 percent of all applications, down from 11.8 percent the
prior week while the VA share increased to 10.9 percent from 10.3 percent.
Applications for USDA mortgages were unchanged at 0.7 percent of the total.

Mortgage
interest rates were mixed
during the week. 
MBA reports that the average contract rate for 30-year fixed-rate
mortgages (FRM) with loan balances below the conforming limit of $424,100
decreased to 4.16 percent from 4.20 percent.  Points declined to 0.35 from 0.39 and the
effective rate moved lower.

The contract
interest rate for jumbo 30-year FRM, loans with balances above the conforming
rate, increased to 4.14 percent from 4.11 percent. Points averaged 0.30, up
from 0.28 the previous week, and the effective rate was also higher.

Thirty-year FRM backed
by the FHA had an average rate of 4.11 percent with 0.41 point. The prior week the
rate was 4.13 percent with 0.39 point. 
The effective rate decreased.

The average
contract interest rate for 15-year fixed-rate mortgages decreased to 3.60
percent from 3.61 percent.  Points
decreased to 0.39 from 0.44, pulling the effective rate lower.

The average
contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to
3.49 percent from 3.42 percent, with
points increasing to 0.52 from 0.48, and the effective rate was up. The ARM
share of mortgage activity was unchanged at 5.6 percent of total applications.

The
MBA said it will report application volume results for the weeks ended December
22 and December 29 on Wednesday, January 3, 2018.

MBA’s Weekly
Mortgage Applications Survey has been conducted since 1990 and covers over 75
percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers,
commercial banks and thrifts.  Base
period and value for all indexes is March 16, 1990=100 and interest rate
information is based on loans with an 80 percent loan-to-value ratio and points
that include the origination fee.

 

 

 



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