Mortgage apps increase as rates continue decline

by Francis Monfort06 Dec 2018

Mortgage applications increased during the week ending Nov. 30 amid a three-week decline in rates, according to the Weekly Mortgage Applications Survey released by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, increased 2% on a seasonally adjusted basis and increased 42% on an unadjusted basis. The results for the week ending Nov. 23 included an adjustment for the Thanksgiving holiday.

The Refinance Index increased 6%. The Purchase Index increased 1% on a seasonally adjusted basis and increased 36% on an unadjusted basis. The unadjusted Purchase Index was 0.2% higher than the same week in 2017.

"Treasury rates continued to slide last week, driven mainly by concerns over slowing global economic growth and US and China trade uncertainty. The 30-year fixed-rate fell for the third week in a row to 5.08% and has declined a total of nine basis points over this span," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Application activity increased over the week for both purchase and refinance loans and were 10% and 7% higher, respectively, than the week before the Thanksgiving holiday. Additionally, we saw a decrease in the average loan size for purchase applications to the lowest since December 2017 ($298,000 from $313,000). This is perhaps an indication that there are fewer jumbo borrowers, or maybe first-time buyers are having better success reaching the market as we close out the year."

MBA found that the refinance share of mortgage activity increased to 40.4% of total applications from 37.9%. The share of adjustable-rate mortgage applications decreased to 7.4%.

Applications for FHA mortgages accounted for 10.2%, down from 9.6%. The VA share of total applications increased to 10% from 9.9%. The share of USDA applications decreased to 0.6% from 0.7%.