More Americans apply for mortgages as refinances rise

by Candyd Mendoza23 May 2019

Mortgage applications rose last week, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 17.

MBA’s Market Composite Index, which measures mortgage loan application volume, showed a 2.4% increase on a seasonally adjusted basis compared to the prior week.

"Mortgage rates fell for the fourth straight week, with the 30-year fixed rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances," said Joel Kan, associate vice president of economic and industry forecasting at MBA.

However, the seasonally adjusted Purchase Index dropped 2% from a week earlier with a 3% decrease unadjusted. The same time a year ago, the index was 7% higher.

Meanwhile, the refinances grew 8% week-over-week.

“The refinance index increased 8% to its highest level in over a month, and once again there was an increase in average refinance loan sizes, as borrowers with larger balances responded accordingly to lower rates,” he said.

The refinance share of applications went down to 9.4% from 10.1% the week before. But the refinance share of mortgage activity was up to 40.5% from 37.9% of total applications the previous week.

The adjustable-rate mortgage (ARM) share of activity also climbed 6.8% of total applications.

The FHA share of total applications decreased 9.4% from 10.1%; the VA share increased 11% from 10.6%; and the USDA share remained unchanged from 0.6%.

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.33% from 4.40%, with points increasing to 0.43 from 0.40 (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) remained unchanged at 4.24%, with points increasing to 0.35 from 0.27 (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 4.34% from 4.32%, with points decreasing to 0.47 from 0.49 (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 remained unchanged at 3.78%, with points decreasing to 0.40 from 0.43 (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 3.57% from 3.82%, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

"Purchase activity declined again, but remained around 7% higher than a year ago,” Kan said. “We're keeping a close eye on whether there may be some adverse effects of the ongoing global trade disputes on overall demand. Some potential homebuyers may be delaying their home search until there's more certainty."