Mortgage Applications Decrease In Latest MBA Weekly Survey

Mortgage applications decreased 4.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 25, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 52 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent higher than the same week one year ago.

“Mortgage rates decreased last week, with the 30-year fixed rate mortgage declining 5 basis points to 3.05 percent – the lowest in MBA’s survey. Despite the decline in rates, refinances fell over 6 percent, driven by a 9 percent drop in conventional refinance applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “There are indications that refinance rates are not decreasing to the same extent as rates for home purchase loans, and that could explain last week’s decline in refinances. Many lenders are still operating at full capacity and working through operational challenges, ultimately limiting the number of applications they are able to accept.”

Added Kan, “Purchase applications also decreased last week, but activity was still at a strong year over-year growth rate of 22 percent. Even as pent-up demand from earlier in the year wanes, there continues to be action in the higher price tiers, with the average loan balance remaining close to an alltime survey high.”

The refinance share of mortgage activity decreased to 63.3 percent of total applications from 64.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2 percent of total applications.

The FHA share of total applications increased to 11.4 percent from 10.1 percent the week prior. The VA share of total applications decreased to 11.9 percent from 12.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.05 percent from 3.10 percent, with points increasing to 0.52 from 0.46 (including the origination fee) for 80 percent 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 $510,400) decreased to 3.33 percent from 3.35 percent, with points decreasing to 0.39 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.15 percent from 3.23 percent, with points increasing to 0.43 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.65 percent from 2.64 percent, with points increasing to 0.49 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.95 percent from 3.19 percent, with points decreasing to 0.55 from 0.64 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.