Lower Rates Fail to Stir Mortgage Applications

Mortgage applications were down modestly during the weekrnended December 12, with purchase applications accounting for the decline.  The Mortgage Bankers Association said itsrnMarket Composite Index, a measure of application volume, lost 3.3 percent on arnseasonally adjusted basis from the week ended December 5 and was 4 percentrnlower on an unadjusted basis.</p

The Refinance Index was unchanged from the previous week butrnthe portion of all mortgage applications intended for refinancing rose from 64rnpercent to 66 percent.  This was thernhighest share of applications captured by refinancing since December 2014.  </p

Refinance Index vs 30 Yr Fixed</p

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The index reflecting applications for home purchasing wasrndown 7.0 percent on a seasonally adjusted basis from the previous week and 10.0rnpercent on an unadjusted basis.  Thernunadjusted index was also 5.0 percent lower than during the same week in 2013.</p

Purchase Index vs 30 Yr Fixed</p

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Applications for the various government backed mortgage programsrnwere mixed.  The FHA share dipped fromrn9.0 percent to 8.7 percent while VA mortgage applications increased from 9.6 torn10.6 percent.  Applications for USDArnmortgages were unchanged at a 0.8 percent share.rn</p

MikernFratantoni, MBA’s Chief Economist said,rn”Amid plummeting oil prices and heightened concerns regarding global economicrngrowth, interest rates dropped sharply through the course of the week, withrnlonger-term Treasury yields falling more than 10 basis points. The averagernmortgage rate also dropped during the week, with several lenders offeringrn30-year fixed-rate loans with rates below four percent. The 30-year conformingrnrate was at its lowest level since May 2013, and the 30-year jumbo rate averagedrn3.99 percent for the week. Surprisingly, Fratantoni said, given this largerndrop in rates, applications for conventional refinance mortgages did notrnincrease last week, but there was a notable pickup in government refinancernapplications, which were up 11 percent for the week, led by an almost 16rnpercent increase in VA refinance applications.” </p

AsrnFratantoni indicated, mortgage rates eased substantially during the week.  All reported mortgage products were down onrnboth an average contract and an effective rate basis. </p

The averagerncontract interest rate for 30-year fixed-rate mortgages (FRM) with conformingrnloan balances ($417,000 or less) decreased to 4.06 percent, the lowest levelrnsince May 2013, from 4.11 percent, with points decreasing to 0.21 from 0.28</p

The jumbornversion of the 30-year FRM, loans, those with balances greater than $417,000,rndecreased to 3.99 percent, the lowest level since May 2013, from 4.07 percent,rnwith points increasing to 0.28 from 0.16. </p

Thirty-yearrnFRM backed by the FHA had an average rate of 3.86 with -0.04 point.  The previous week the rate was 3.87 percentrnwith 0.03 point.  </p

The averagerncontract interest rate for 15-year fixed-rate mortgages decreased to 3.33rnpercent from 3.35 percent.  Pointsrndecreased to 0.27 from 0.30. </p

Applicationsrnfor adjustable rate mortgages (ARMs) eased from 7.0 percent of the total duringrnthe previous week to 6.2 percent.  Thernmost popular ARM, the 5/1 hybrid mortgage, had an average contract interestrnrate of 3.0 percent, down 11 basis points from the previous week.  Points increased to 0.43 from 0.19.   </p

Data for MBA’s report is derived from its Weekly MortgagernApplications Survey which has been conducted since 1990.  The survey covers over 75 percent of all U.S.rnretail residential mortgage applications and respondents include mortgagernbankers, commercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100.  Interest ratesrnpresume a loan with an 80 percent loan-to-value ratio and points include thernorigination fee.

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