Mortgage Apps Hit Harder Than Normal by Holidays

Either eating turkey, Black Friday bargain hunting, or maybe both appearrnto have diverted many Americans from pursuing a mortgage last week.  Applications for mortgages plummeted duringrnthe week ended November 28, a week that was shortened by the Thanksgiving Dayrnholiday. Seasonally adjusted applications data from the Mortgage BankersrnAssociation’s (MBA’s) Weekly Mortgage Application Survey also contain anrnadjustment to account for the holiday. </p

MBA said that its Market Composite Index, a measure of loan applicationrnvolume, was down 7.3 percent on a seasonally adjusted basis from a week earlier.  Unadjusted the Composite was down 37 percent,rnthe largest drop since the first full week of 2014. </p

The Refinance Index was down 13 percent comparedrnto the week ended November 21 and 60 percent of applications during the weekrnfor refinancing compared to 63 percent the week before.</p

Refinance Index vs 30 Yr Fixed</p

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The seasonally adjustedrnPurchase Index did increase, rising 3 percent from the previous week, but thernunadjusted Purchase Index dropped 32 percent from its level a week earlier andrnwas 4 percent lower than during the same week in 2013.  </p

Purchase Index vs 30 Yr Fixed</p

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According to MBA the distribution ofrnapplications across mortgage products included a 9.3 percent share for FHArnbacked loans, 1 basis point less than the previous week.  The VA share dropped from 10.3 percent to 9.4rnpercent while the USDA retained the same 0.8 percent share. </p

Interest rates during the week werernmixed.  The average contract interestrnrate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ofrn$417,000 or less, was 4.08 percent, the lowest level since May 2013.  The previous week the rate had been 4.15 percent. rnPoints increased to 0.28 from 0.25 and the effective rate was lower thanrnduring the previous week.</p

The average contract interest rate forrn30-year FRM with jumbo loan balances (greater than $417,000) increasedrnone basis point to 4.11.  Points were down to 0.22 from 0.25 and the effective raternincreased. </p

FHA-backed 30-year FRM had an averagerncontract rate of 3.85 percent with 0.09 point. rnDuring the week ended November 21 the contract rate had been 3.90rnpercent with 0.13 point.  The effectivernrate also decreased. </p

The average contract interest rate forrn15-year fixed-rate mortgages slipped to 3.30 percent from 3.35 percent, with points remaining unchanged at 0.25.  The effective rate decreased. </p

The share of adjustable rate mortgage (ARM)rnapplications during the week fell from 7 to 6.7 percent of the total.  The average contract interest rate for 5/1rnARMs increased to 3.07 percent from 3.06 percent, while points dropped to 0.32rnfrom 0.41, bringing the effective rate down compared to the previous week.  </p

MBA’s survey, which has been conductedrnsince 1990, covers over 75 percentrnof all U.S. retail residential mortgage applications.  Respondentsrninclude mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100 and interestrnrate data assumes loans with an 80 percent loan to value ratio.  Points include the origination fee.

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