The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week decrease of 3.3% in the group’s seasonally adjusted composite index for the week ending March 18. Mortgage loan rates decreased on all loan types last week.
On an unadjusted basis, the composite index decreased by 3% week over week. The seasonally adjusted purchase index decreased by 1% compared with the week ended March 11. The unadjusted purchase index decreased by 1% for the week and is now 25% higher year over year.
The MBA’s refinance index decreased by 5% week over week, and the percentage of all new applications that were seeking refinancing fell from 55% to 53.9%.
Adjustable rate mortgage loans accounted for 4.9% of all applications, unchanged from the previous week.
Monday’s report on existing home sales from the National Association of Realtors showed that sales had dropped 7.1% month over month in February to a seasonally adjusted annual rate of 5.08 million. The report generated stories on how the housing market is headed for another serious downturn, if not an outright collapse. That seems unlikely given that the decline in sales is almost entirely due to low inventory. More inventory would generate more sales and smaller price increases.
The other thing to recall is that sales of existing homes are less important in the overall U.S. economy because the only addition they make to gross domestic product is the broker’s fee. New home construction and sales have a far larger impact. Later Wednesday we’ll get the monthly report from the Census Bureau on new home sales. The consensus estimate calls for an increase in the seasonally adjusted annual rate from 494,000 in January to 510,000 in February.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 3.94% to 3.93%. The rate for a jumbo 30-year fixed-rate mortgage decreased from 3.86% to 3.85%. The average interest rate for a 15-year fixed-rate mortgage fell from 3.22% to 3.18%.
The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 3.23% to 3.13%. Rates on a 30-year FHA-backed fixed-rate loan fell from 3.77% to 3.74%.
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