Purchase Mortgage Applications Lose Steam as Rates Rise

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Purchase mortgage
applications, after starting out strong at the beginning of the year, stalled
for the third straight time
last week, bringing overall activity down. The
Mortgage Bankers Association (MBA) reports that its Market Composite Index, a
measure of the volume of applications received, had its worst performance since
mid-December.  

The index for the
week ended February 9 was down 4.1 percent on a seasonally adjusted basis compared
to the previous week and declined 2 percent on a non-adjusted basis as the seasonally
adjusted index measuring those purchase mortgage applications lost 6 percent compared
to the week ended February 2. The unadjusted index was 3 percent lower week-over-week
but remained 4 percent higher than during the same period in 2017.  The Refinancing Index last 2 percent, but the
overall slowing of activity meant an 0.1 percent uptick in refinancing’s share
to 46.5 percent.

 

Refi Index vs 30yr Fixed

 

 

Purchase Index vs 30yr Fixed

 

 

The
share of applications that were for FHA loans dipped to 10.1 percent from 10.4
percent and the VA share was unchanged from the prior week at 10.1 percent.  The USDA share was 0.8 percent, up from 0.7
percent the previous week.

Contract and
effective interest rates on fixed rate loans continued to trend higher, with average
rates for several establishing new 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 at its highest level since January 2014, 4.57
percent, with 0.59 point. The previous week the rate was 4.50 percent with 0.57
point.

Jumbo FRM loans, those
with balances above the $453,100 conforming limits, were also back to January
2014 levels. The average rate jumped from 4.47 percent with 0.44 point to 4.55
with 0.47 point.

Loans backed by
FHA saw an average increase of seven basis points in the contract rate, to 4.54
percent. Points increased to 0.73 from 0.69.

The average rate
for FRM with 15-year terms reached a level last seen in April 2011, 4.00
percent, up from 3.92 percent the previous week. Points were unchanged at 0.65.

As average rates
for adjustable-rate mortgages (ARMs) improve, their market share continues to
slowly tick up, going from 6.1 to 6.3 percent last week. The average contract
interest rate for 5/1 ARMs decreased to 3.74 percent from 3.77 percent, with points decreasing to 0.37 from
0.42. The effective rate also declined.

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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