Mortgage applications down as borrowers avoid rising rates

by Steve Randall29 Aug 2019

Rising mortgage rates dissuaded homebuyers and homeowners from mortgage applications last week according to new data.

The Mortgage Bankers Association’s Market Composite Index shows that mortgage applications were down 6.2% for the week ending August 23, 2019, compared to one week earlier on a seasonally adjusted basis; and down 7% unadjusted.

The Purchase Index was down 4% adjusted and down 6% unadjusted. It was up 2% from a year earlier. Meanwhile the Refinance Index was down 8% week-over-week but 167% higher than a year ago.

"U.S. Treasury yields were volatile over the course of the week, as the ongoing trade dispute between the U.S. and China continued to generate uncertainty among investors. Rates increased for the first time since the week of July 12 but were still 80 basis points lower than the beginning of the year," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "With rates edging higher, refinances and purchase applications fell, at 8% and 6%, respectively."

Share of applications

  • The refinance share of mortgage activity decreased to 62.4% of total applications from 62.7% the previous week;
  • The ARM share of activity decreased to 6.1% of total applications;
  • The FHA share of total applications increased to 10.5% from 9.7% the week prior;
  • The VA share of total applications decreased to 9.9% from 11.6% the week prior;
  • The USDA share of total applications remained unchanged from 0.5% the week prior.

Average contract rates

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.94% percent from 3.90%, 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 3.89% from 3.88%, with points increasing to 0.26 from 0.24 (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 decreased to 3.80% from 3.87%, with points increasing to 0.33 from 0.32 (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 increased to 3.31% from 3.30%, with points remaining unchanged at 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week;
  • The average contract interest rate for 5/1 ARMs increased to 3.42% from 3.35%, with points decreasing to 0.39 from 0.41 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

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