Mortgage applications remain at elevated level says MBA

by Steve Randall24 Jan 2020

Mortgage applications have started the year with strength according to the Mortgage Bankers Association.

Its weekly survey of mortgage lenders shows that applications dipped slightly in the week ending January 17, 2020, but the general trend is positive.

Week-over-week the Market Composite Index was down 1.2% on a seasonally adjusted basis and was up 0.4% on an unadjusted basis.

"Mortgage applications dipped slightly last week after two weeks of healthy increases, but even with a slight decline, the total pace of applications remains at an elevated level. The purchase market has started 2020 on a strong note, running 8% higher than the same week a year ago," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

The Purchase Index was down 2% on a seasonally adjusted basis from a week earlier and up 4% on an unadjusted basis.

The Refinance Index was also down 2% but was 166% higher than a year earlier.

"Refinance applications remained near the highest level since October 2019, as the 30-year fixed rate was unchanged at 3.87 percent, while the 15-year fixed rate decreased to its lowest level since November 2016,” added Kan.

Kan also sees little movement for mortgage rates in the near term.

“Even with more positive developments surrounding the US and China trade negotiations and healthy retail sales data, investors seemed cautious and maintained their demand for safer US Treasuries, which kept yields lower. Our expectation is that rates will stay along this same narrow range," he said.

Share of activity

  • The refinance share of mortgage activity decreased to 61.6% of total applications from 62.9% the previous week.
  • The adjustable-rate mortgage (ARM) share of activity increased to 4.6% of total applications.
  • The FHA share of total applications decreased to 11.3% from 12.7% the week prior.
  • The VA share of total applications increased to 13.8% from 12.1 percent the week prior.
  • The USDA share of total applications remained unchanged from 0.5% the week prior.

Interest rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.87% , with points decreasing to 0.27 from 0.32 (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) increased to 3.87% from 3.83%, with points decreasing to 0.21 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 remained unchanged at 3.78%, with points decreasing to 0.25 from 0.30 (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 the lowest level since November 2016, 3.25%, from 3.30%, with points decreasing to 0.22 from 0.27 (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 3.29 percent from 3.35%, with points increasing to 0.25 from 0.11 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

 


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