Mortgage Apps Gaining Ground Despite Higher Rates

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Labor Day typically marks the end of
summer and the resumption of business as usual. 
Hopefully it also marked the beginning of a turnaround for mortgage
applications, which increased across the board for the first time since
The Mortgage Bankers Association (MBA) said its Market Composite
Index, a measure of mortgage application volume, was up 1.6 percent on a
seasonally adjusted basis during the week ended September 14.  On an unadjusted basis the volume increased
12 percent from the previous week which was shortened by the Labor Day holiday.

The seasonally adjusted Purchase Index
eked out an 0.3 percent gain
, the third week in a row it has increased.  On an unadjusted basis the index was up 9
percent week-over-week and was 4 percent higher than the same week in 2017.

Even refinancing managed a gain.  The volume of applications rose 4 percent
from that of the week ended September 7 and the market share of refinancing
increased from 37.8 percent to 39.0 percent.


Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed



Applications for FHA mortgages
accounted for 10.6 percent of the total, up from 10.4 percent the previous
week. The VA share declined to 10.0 percent from 10.5 percent and the USDA
share fell to 0.7 percent from 0.8 percent.

The average contract
interest rate rose
during the week for all products and the effective rate rose
for all but one loan type. The outlier was the jumbo 30-year fixed-rate
mortgage (FRM), loans with balances that exceed the conforming loan limit of
$453,100.  The contract rate did rise
from 4.72 percent to 4.77 percent, but a decline in points from 0.47 to 0.28 pulled
the effective rate lower.

The average rate for
30-year FRM with balances at or under the conforming limit, increased to its
highest level since  April 2011, 4.88
percent.  The previous week the rate was 4.84
percent. Points decreased to 0.44 from 0.46.

Thirty-year FRM backed
by the FHA
had an average rate of 4.90 percent, an increase of 6 basis points
from the prior week.  Points jumped to
0.73 from 0.51.

The rate for 15-year FRM
rose to 4.30 percent from 4.28 percent. Points averaged 0.49 compared to 0.47
the week before.

The average rate for
adjustable rate mortgages (ARM)
bumped up 10 basis points to 4.17 percent while
points dipped to 0.29 from 0.30. The ARM share of activity increased to 6.5
percent of total applications from 6.4 percent.

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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