Mortgage Applications Resume Downward Spiral

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The surge
in mortgage applications last week, fostered by a 6.0 percent increase in
refinancing, was short-lived.  Despite slightly
lower interest rates, the Mortgage Bankers Association (MBA) reports that its
Market Composite Index, a measure of applications received by lenders, has resumed
its downward spiral,
with volume decreasing for the 17th time in the last 22

During the
week ended August 24 the total volume of applications was 1.7 percent lower
than the previous week on a seasonally adjusted basis.  The decline was 3.0 percent on an unadjusted
basis.  The Purchase Index was down 1
percent from the week ended August 17 on an unadjusted basis and 3.0 percent
unadjusted.  The unadjusted Purchase
Index remained 3.0 percent higher than during the same week in 2017.  The Refinance Index also dropped 3.0 percent when
compared to the previous week, however, the share of all applications that were
for refinancing was unchanged at 38.7 percent.


Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed



distribution of applications across loan products was identical to that of a
week earlier
; the FHA share was 10.2 percent, VA applications had a 10.5
percent share, and the USDA allocation was 0.7 percent.

interest rates were down or flat when compared to the prior week.  The average contract rate for 30-year
fixed-rate mortgages (FRM) with origination balances at or below the mandated
limit of $453,100 was 4.78 percent with 0.46 point.  This was a decrease from the August 17 level of
4.81 percent with 0.42 point and the lowest rate in more than a month.  The effective rate was also down.

The jumbo
version of the 30-year FRM
, loans with balances larger than the conforming
limit, maintained the same 4.68 percent rate as the prior week.  Points increased to 0.30 from 0.28 but the
effective rate was also unchanged.

largest rate change was with the 30-year FRM backed by the FHA.  That rate fell to 4.77 percent from 4.82
percent while points rose to 0.75 from 0.69. 
The effective rate was also lower.

year FRM
had an average rate of 4.24 percent with 0.48 point.  The previous week the rate was 4.25 percent
with 0.47 point. The effective rate decreased.

The 5/1
adjustable rate mortgage (ARM)
had an average rate of 3.95 percent compared to
4.00 percent a week earlier.  Points fell
from 0.52 to 034 and the effective rate also declined.  The ARM share of applications decreased to
6.3 percent from 6.5 percent.

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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