Refi Applications at 8-Year Low

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Mortgage activity
slowed again last week. The Mortgage Bankers Association said its Market
Composite Index, which measures the volume of mortgage loan applications, was
down on a seasonally adjusted basis by 2.7 percent during the week ended May 11
compared to a week earlier. It was the fourth consecutive week the composite lost
ground.  The index was down 3.0 percent
on an unadjusted basis.

Both the adjusted
and unadjusted Purchase Indices fell 2 percent.  The unadjusted index remained 4.0 percent higher
than during the same week in 2017.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

Refinancing volume
declined 4.0 percent to its lowest level since August 2008
, while the share of total
applications that were for refinancing was 35.9 percent, also the lowest since
August 2008.  During the week ended May 4
refinancing garnered a 36.3 percent share.

Applications
for FHA loans comprised 10.3 percent of the total received, up from 10.1
percent the previous week.  The VA share
ticked down to 10.3 percent from 10.4 percent and the USDA share increased to
0.8 percent from 0.7 percent the prior week.

Both
contract and effective interest rates were mixed on average.  The average contract rate for 30-year fixed
rate mortgages (FRM) with conforming loan balances of $453,100 or less averaged
4.77 percent, down 1 basis point from the rate a week earlier.  Points were unchanged at 0.50 and the
effective rate declined.

The rate for jumbo 30-year
FRM
, loans that exceed the conforming loan limit, rose to 4.73 percent from
4.65 percent.  Points declined to 0.35
from 0.36 and the effective rate moved higher.

The average
contract interest rate for FHA-backed 30-year FRM declined 2 basis points to
4.78 percent.  Points rose to 0.76 from
0.75 and the effective rate was lower.   

Fifteen-year FRM remained
at the previous week’s contract rate of 4.20 percent. Points increased from
0.48 to 0.53 and the effective rate was up.

The rate for 5/1 adjustable
rate mortgages
(ARM) increased to the highest level since MBA began tracking
the product, 4.09 percent with 0.56 point. 
The previous week the rate was 4.00 percent with 0.43 point. The
effective rate increased. The share of applications for ARMs was unchanged from
the previous week at 6.5 percent of all those received.

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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