New home purchase mortgage applications down last month

by Steve Randall21 Oct 2019

The number of mortgage applications made in September that were for the purchase of new homes jumped 34.2% compared to a year earlier.

But applications were down 8% month-over-month according to data from the Mortgage Bankers Association’s Builder Application Survey. MBA estimates new home sales were running at a seasonally adjusted annual rate of 725,000 units, down 7.6% from the August pace. 

“Last month's slowdown was likely caused by ongoing economic and interest rate uncertainty, as well as the fact that homebuilders continue to grapple with high building costs and labor shortages," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Purchase applications this year for new and existing homes for sale have consistently outpaced year ago levels. This trend should continue in the final months of the year - especially considering how much higher rates were at the end of 2018."

Weekly applications

Meanwhile, MBA data reveals that mortgage applications continued rising for the week ending October 11, 2019.

The Weekly Mortgage Applications Survey shows a 0.5% increase (week-over-week seasonally adjusted) in its Market Composite Index with a 1% increase on an unadjusted basis.

Refinances continued to drive overall applications.

"The ongoing interest rate volatility is impacting a borrowers' ability to lock in the lowest rate possible. Despite a slight rise in mortgage rates, refinance applications increased 4% and were 199% higher than a year ago," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Purchase applications slowed for the second week in a row [down 4% both adjusted and unadjusted]. While near term economic uncertainty is still a factor, other fundamental issues, such as a lack of housing inventory in many markets, is preventing purchase activity from meaningfully rising. However, purchase applications were still much higher [12%] than a year ago. This is a reminder that the purchase environment in 2019 continues to be stronger than in 2018."  

Share of applications

Compared to a week earlier:

  • the refinance share of mortgage activity increased to 62.2% of total applications from 60.4%;
  • the adjustable-rate mortgage (ARM) share of activity increased to 5.5%;
  • the FHA share of total applications increased to 11.3% from 10.3%;
  • the VA share increased to 12.9% from 12.3%;
  • the USDA share decreased to 0.4% from 0.5%.

Average contract rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.92% from 3.90%, with points decreasing to 0.35 from 0.37 (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 3.90%, with points decreasing to 0.23 from 0.28 (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 increased to 3.77% from 3.75%, with points decreasing to 0.19 from 0.29 (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 3.32% from 3.35%, with points increasing to 0.31 from 0.30 (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 3.37% from 3.25%, with points decreasing to 0.23 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. 


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