Mortgage Applications Fell Last Week

According to the Mortgage Bankers Association, applications for mortgages declined by -0.8% last week compared with a week earlier. The refinance index rose by 1%, but the purchase index fell by -9%. Here’s the MBA’s take:

Refinance volume increased again last week, but the composition of activity changed markedly. Despite rates remaining near all-time lows, conventional refinance application volume declined, and the HARP share of refinance activity dropped to 20 percent. On the other hand, FHA refinance volume exploded to an all-time high, more than doubling over the week. … Purchase activity fell off last week, but this is likely only a recalibration following the Memorial Day holiday, as the level of activity remains within the narrow band seen for the past 3 years.

Refinancings accounted for 81% of mortgage applications in the week, up from 79% a week earlier. Adjustable rate mortgages accounted for just 4% of the applications.

The average contract interest rate for a 30-year fixed conforming loan fell to 3.87%, equalling the lowest rate in the history of the survey, which has been conducted since 1990. The interest rate on a 30-year jumbo fell to 4.06%, the lowest rate ever, and the average rate on a 15-year fixed-rate mortgage rose slightly from 3.23% to 3.25%.

Yesterday’s report on new housing starts showed an increase in new construction permits, but when added to today’s report on mortgage applications one has to wonder if buyers will show up.

Paul Ausick