Mortgage applications down as rates rise after 6 weeks

by Steve Randall21 Jun 2019

There was a decline in mortgage applications in the week ending June 14 as rates increased after their recent downward trend.

The Mortgage Bankers Association’s Market Composite Index shows a 3.4% decrease week-over-week seasonally adjusted and a 4% decrease unadjusted.

The Refinance Index dropped 4% while the Purchase Index was down 4% adjusted and 5% unadjusted but was 4% above its year-ago level as first-time buyers showed strong demand and low unemployment helped boost homebuying.

"After a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Borrowers were sensitive to rising rates, but the refinance share of applications was still at its highest level since January 2018, and refinance activity was at its second highest level this year. Government refinances actually increased last week, led by a 17% jump in VA refinance applications, while conventional refinance applications decreased 7%."

Other key findings:

  • The refinance share of mortgage activity increased to 50.2% of total applications from 49.8% the previous week;
  • The adjustable-rate mortgage (ARM) share of activity decreased to 6.1% of total applications;
  • The FHA share of total applications increased to 9.4% from 8.9% the week prior;
  • The VA share of total applications increased to 11.9% from 11.0% the week prior;
  • The USDA share of total applications decreased to 0.5% from 0.6% the week prior.

Average contract interest rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.14% from 4.12%, with points increasing to 0.38 from 0.33 (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) remained unchanged at 4.04%, with points increasing to 0.24 from 0.17 (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 4.12% from 4.09%, with points increasing to 0.44 from 0.26 (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 decreased to 3.50% from 3.53%, 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 5/1 ARMs increased to 3.45% from 3.43%, with points decreasing to 0.23 from 0.32 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

 


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