Mortgage Applications Slide Despite Falling Rates

Mortgage application volume was mixed duringrnthe week ended November 21. The Mortgage Bankers Association (MBA) reportedrnthat its Market Composite Index, a measure of the volume of applications forrnresidential mortgages was down 4.3 percent from the previous week on arnseasonally adjusted basis but rose 5.0 percent on an unadjusted basis.  This discrepancy is probably accounted for byrnan adjustment made in date the previous week to account for the Veterans Dayrnholiday.</p

The Refinance Index was also down 4.0 percentrncompared to the week ended November 14 but the share of applications madernduring the week for refinancing rose from 61 percent to 63 percent.</p

Refinance Index vs 30 Yr Fixed</p

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The seasonally adjusted Purchase Index lost 5rnpercent from the previous week’s level but the unadjusted was 1 percentrnhigher.  The unadjusted Purchase Indexrnwas 10 percent lower than during the same week in 2013. </p

Purchase Index vs 30 Yr Fixed</p

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The FHA share ofrntotal applications decreased to 9.4 percent from 9.9 percent the previous weekrnand the VA share fell to 10.3 percent from 11.5 percent.  The USDArnshare of total applications remained unchanged at 0.8 percent.</p

Interest ratesrngathered through the MBA’s Weekly Mortgage Applications Survey were mixed. Thernaverage contract interest rate for 30-year fixed-rate mortgages (FRM) withrnconforming loan balances of $417,000 or less decreased to 4.15rnpercent from 4.18 percent, Points increased to 0.25 from 0.24 and the effective rate decreased. .</p

The averagerncontract interest rate forrnjumbo 30-year FRM with loan balancesrngreater than $417,000 wasrnunchanged at 4.10 percent.  Pointsrnincreased to 0.25 from 0.16 and the effective rate rose as well.  </p

Thirty-year FRMrnbacked by FHA had an average contract rate of 3.90 percent compared to 3.85rnpercent the previous week.  Pointsrndecreased to 0.13 from 0.18 and the effective rate decreased. </p

The average raternfor 15-year FRM decreased from 3.38 percent with 0.27 point to 3.35 percentrnwith 0.25 point.  The effective rate wasrnalso lower than during the preceding week. rn</p

Adjustable raternmortgages (ARMs) had a marginally larger market share during the prior week,rnincreasing to 7.0 percent from 6.9 percent. rnThe contract rate for a 5/1 hybrid ARM was down 3 basis points to 3.06rnpercent while points increased from 0.34 to 0.41.  The effective rate was unchanged.  </p

MBA’s survey coversrnover 75 percentrnof all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100.  Average and effective interest raterninformation is based on loans with an 80 percent loan to value ratio and pointsrninclude the origination fee.

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