Application Volumes Rise Despite Surging Rates

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Mortgage
activity continued strong during the second week of the New Year.  The Mortgage Bankers Association (MBA)
reports that its Market Composite Index, a measure of loan application volume,
increased 4.1 percent on a seasonally adjusted basis during the week ended
January 12.  Volume on an unadjusted
basis was up 32 percent, as the index readjusted from its downturn during the
holiday week ended January 5.

The seasonally adjusted Purchase
Index rose 3 percent from a week earlier while the unadjusted index was up 32
percent.  The unadjusted index was 7
percent higher than during the same week in 2017.

The Refinance Index increased 4
percent from the previous week but lost market share.  It accounted for 52.2 percent of all the
week’s applications, down from 52.9 percent a week earlier.

 

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

 

FHA’s share of total applications ticked up to 11.7
percent from 11.1 percent the previous week and USDA loans received 0.8 percent
of the total, compared to 0.7 percent. VA loans accounted for 10.7 percent of all
applications, down from 11.4 percent.

Interest rates increased across the board on both a
contract and an effective basis, with most reaching their highest levels since
early in 2017, but several hitting multi-year highs. The average contract
interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan
balances of $453,100 or less was the highest since March 2017, 4.33 percent.  This was a week-over-week increase of 10
basis point. Points rose to 0.54 from 0.35 

The
average contract interest rate for jumbo 30-year FRM, loans with balances
greater than the performing rate, was 4.25 percent, also the highest since
March, rising from 4.16 percent.  Points jumped
to 0.36 from 0.23. 

The
average contract interest rate for 30-year FRM backed by the FHA increased to
4.30 percent, from 4.16 percent.  This too was a 10-month high.  Points averaged 0.65, up from 0.42.

Fifteen-year
FRM rates were at the highest since January 2014, 3.77 percent with 0.44 point.
The previous week the rate was 3.66 percent with 0.42 point.

The
average contract interest rate for 5/1 adjustable rate mortgages (ARMs)
increased to its highest level since April 2011, 3.62 percent, a 12-basis point
gain from the prior week, with points decreasing to 0.48 from 0.51.  The ARM share of activity increased to 5.2
percent of total applications from a 14-month low of 5.0 percent a week before.

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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