Refi Applications Did Last Week’s Heavy Lifting, ARMs Getting Bigger

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The
strong performance of purchase mortgage applications during the week ended
February 23 didn’t last long, and overall mortgage activity barely stayed in
positive territory last week.  A modest
increase in refinancing
allowed the Mortgage Bankers Association’s (MBA’s)
Market Composite Index to eke out an 0.3 percent increase on a seasonally
adjusted basis during the week ended March 2 while the unadjusted index gained 13
percent.   The latter reflected a recovery from the
earlier week which had been shortened by the Presidents’ Day holiday.  

The
Purchase Index ticked down 1 percent on a seasonally adjusted basis after
jumping 6.0 percent the week before, its largest gain in nearly two months. The
unadjusted version was 13 percent higher compared to the earlier holiday period
and was up 1 percent from the same week in 2017.

The
Refinance Index
was up 2 percent from the prior period, its first positive
reading in four weeks. The market share of refinancing applications was
unchanged from the previous week at 41.8 percent.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Applications
for FHA-backed mortgages declined to 10.1 percent of the total compared to 10.3
percent a week earlier and VA applications dropped to 9.9 percent from 10.7
percent. Applications for USDA mortgages rose to 0.9 percent from 0.8 period.

Mortgage rates
continued to be mixed. The average contract interest rate for 30-year
fixed-rate mortgages (FRM) with conforming loan balances of $453,100 or less
increased 1 basis points to its highest level since January 2014, 4.65 percent.
 Points decreased to 0.58 from 0.63,
leaving the effective rate unchanged.   

Thirty-year FRM
with jumbo loan balances exceeding the conforming loan limit had an average
rate of 4.56 percent with 0.52 point, down from 4.57 percent with 0.52 point. The
effective rate also declined.   

The average
contract interest rate for 30-year FRM backed by the FHA was unchanged from the
prior week at 4.68 percent.  Points rose to
0.79 from 0.75, moving the effective rate higher.  

The average
contract interest rate for 15-year FRM rose 4 basis points to 4.11 percent, its
highest level since April 2011.  Points
increased to 0.64 from 0.59 and the effective rate increased.  

The market share
for adjustable rate mortgages (ARMs) was the highest since June of last year,
7.3 percent compared to 6.7 percent the previous week. The average contract
interest rate for 5/1 ARMs decreased to 3.81 percent from 3.85 percent, and points
decreased to 0.46 from 0.59, producing a lower effective rate.

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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