Mortgage Loan Rates Dropped Last Week, Applications Continue Slide

The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 2.5% in the group’s seasonally adjusted composite index for the week ending February 1. The prior week’s index was adjusted to account for the Martin Luther King Jr. Day holiday. Mortgage interest rates dropped on all five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index dipped by 12% in the past week. The seasonally adjusted purchase index decreased by 5% compared with the week ended January 25. The unadjusted purchase index rose by 13% for the week and was 2% lower year over year.

Mortgage loan rates for a top-tier 30-year fixed-rate loan slipped from 4.61% to 4.53% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.54% for that loan. The yield on a 10-year U.S. Treasury note ticked down in the last week from 2.71% to 2.70% as of last night’s close. A year ago the 10-year note yielded 2.77%.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, commented:

Mortgage rates for all loan types declined last week, with the 30-year fixed mortgage rate falling seven basis points to 4.69 percent – the lowest rate since April 2018. Despite more favorable borrowing costs, and after a three-week surge in activity, purchase applications have slowed over the past two weeks, and are now almost 2 percent lower than a year ago. However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.

The MBA’s refinance index increased by 0.3% week over week and the percentage of all new applications that were seeking refinancing dipped from 42.0% to 41.6%.

Adjustable rate mortgage loans accounted for 7.8% of all applications, down from 7.9% in the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage fell from 4.76% to 4.69%. The rate for a jumbo 30-year fixed-rate mortgage dropped from 4.60% to 4.50%. The average interest rate for a 15-year fixed-rate mortgage decreased from 4.16% to 4.11%.

The contract interest rate for a 5/1 adjustable rate mortgage loan slipped from 4.14% to 4.04%. Rates on a 30-year FHA-backed fixed-rate loan fell from 4.77% to 4.70%.