Mortgage applications continued higher last week

by Steve Randall27 Feb 2020

Mortgage applications increased 1.5% on a seasonally-adjusted basis last week, the Mortgage Bankers Association says.

Its weekly survey of mortgage applications includes an adjustment for the Presidents’ Day holiday. On an unadjusted basis, the Market Composite Index was down 7% week-over-week.

The Refinance Index decreased 1% from the previous week but was up 152% up year-over-year. The seasonally adjusted Purchase Index increased 6% week-over-week while the unadjusted Purchase Index decreased 1% week-over-week but was 10% higher than the same week of 2019.

"Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5% higher," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22%. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers."

The fears surrounding coronavirus have seen Treasury yields drop to record lows last week and Fratantoni says next week’s index will show the impact of that on mortgage activity.

Share of activity

  • The refinance share of mortgage activity decreased to 60.8% of total applications from 63.2% the previous week
  • The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% of total applications.
  • The FHA share of total applications increased to 10.5% from 9.5% the week prior.
  • The VA share of total applications decreased to 11.8% from 12.1% the week prior.
  • The USDA share of total applications increased to 0.5% from 0.4% the week prior. 

Average contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.73% from 3.77%, with points decreasing to 0.27 from 0.28 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.72% from 3.79%, with points increasing to 0.23 from 0.19 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.84% from 3.86%, with points increasing to 0.26 from 0.24 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.18% from 3.22%, with points decreasing to 0.23 from 0.26 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.21% from 3.23%, with points increasing to 0.28 from 0.21 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. 


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