Brexit is affecting US mortgage applications

by Steve Randall24 Oct 2019

The ongoing uncertainty of US trade relations and the continuing Brexit saga across the Atlantic are weighing on mortgage applications.

The knock-on effect of wider economic issues has contributed to a 11.9% decrease in mortgage applications (seasonally adjusted, 12% unadjusted) in the week ending October 18, 2019.

The stats from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey reveals that despite the decline, things are still running hotter than a year ago.

"Interest rates continue to be volatile, with Brexit votes and ongoing trade negotiations swinging rates higher or lower on any given day. Last week, mortgage rates jumped 10 basis points and were above 4 percent for the first time since September," said Mike Fratantoni, MBA Senior Vice President and Chief Economist.

Refinance activity was down 17% from a week earlier but were still 126% above their year-ago level. For purchases, the MBA’s index was down 4% (seasonally adjusted and unadjusted) but was 6% higher than a year earlier.

Low mortgage rates continue to fuel buyer interest, but supply and affordability challenges persist,” added Fratantoni.

Share of activity
Compared with the previous week:

  • The refinance share decreased to 58.5% from 62.2%;
  • The adjustable-rate mortgage (ARM) share of activity decreased to 4.8% of total applications;
  • The FHA share increased to 12.1% from 11.3%;
  • The VA share increased to 13.5% from 12.9%;
  • The USDA share increased to 0.5% from 0.4%.

Average contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.02% from 3.92%, with points increasing to 0.38 from 0.35 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 3.96% from 3.90%, with points increasing to 0.30 from 0.23 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.79% from 3.77%, with points increasing to 0.26 from 0.19 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.39% from 3.32%, with points increasing to 0.35 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.29% from 3.37%, with points increasing to 0.35 from 0.23 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.


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