Trade tensions are weighing on mortgage applications

by Steve Randall05 Sep 2019

Mortgage applications decreased last week according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

The overall Market Composite Index was down 3.1% week-over-week on a seasonally adjusted basis and down 4% unadjusted. The Refinance Index posted a 7% decrease while the Purchase Index gained 4% on a seasonally adjusted basis and gained 1% unadjusted.

Despite the weekly decrease for refis, applications were up 152% from a year earlier, while purchase apps were up 5% year-over-year.

"Ongoing trade tensions between the U.S. and China led to volatile, yet declining Treasury rates last week, causing the 30-year fixed mortgage rate to fall to 3.87%, its lowest level since November 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

Share of applications

The data shows that the share of total mortgage applications for:

  • refinances decreased to 60.4% from 62.4% the previous week;
  • adjustable-rate mortgages (ARMs) decreased to 5.7%;
  • FHAs decreased to 10.2% from 10.5% the week prior;
  • Vas increased to 11.3% from 9.9% the week prior;
  • USDAs increased to 0.6% 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) decreased to 3.87% from 3.94%, with points decreasing to 0.34 from 0.38 (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 $484,350) increased to 3.94% from 3.89%, with points decreasing to 0.24 from 0.26 (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 3.80%, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.29% from 3.31%, with points decreasing to 0.32 from 0.33 (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 3.40% from 3.42%, with points decreasing to 0.27 from 0.39 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.


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