Refinance activity was boosted by lower rates
There was an increase in mortgage applications last week compared to the week earlier as consumers reacted to the Fed’s interest rate announcement.
Although it did not cut rates, the Fed’s more dovish tone led to lower Treasury yields.
The Mortgage Bankers Association’s Weekly Composite Survey gained 1.3% on a seasonally-adjusted basis and 1% unadjusted.
The Refinance Index increased 3% from the previous week while the seasonally adjusted Purchase Index decreased 1% and the unadjusted Purchase Index decreased 2% compared with the previous week and was 9% higher than the same week one year ago.
“Mortgage rates dropped again for most loan types, which led to an increase in refinance activity, partly driven by a 9% jump in VA applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The 30-year fixed rate has now dropped in three of the last four weeks, and at 4.06%, reached its lowest level since September 2017. Despite these lower rates, purchase applications decreased 2%, but were still considerably higher (9%) than a year ago."
Kan added that despite supply issues, the purchase market has generally been higher in 2019 than a year earlier.
Other highlights
- The refinance share of mortgage activity increased to 51.5% of total applications from 50.2% the previous week;
- The adjustable-rate mortgage (ARM) share of activity increased to 6.5% of total applications;
- The FHA share of total applications increased to 9.6% from 9.4% the week prior;
- The VA share of total applications increased to 12.5% from 11.9% the week prior;
- The USDA share of total applications increased to 0.6% from 0.5% the week prior.
