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Mortgage Applications Hit Recent Highs

By: Jann Swanson
Posted Wed, Nov 13 2019, 8:07 AM

The Mortgage Bankers Association (MBA) said application activity during the week ended November 8 was the strongest since late September, with both purchasing and refinancing indices posting gains.  MBA's Market Composite Index, a measure of mortgage loan application volume, rose 9.6 percent on a seasonally adjusted basis from the week ended November 1.  On an unadjusted basis, it was up 9.0 percent.

The Refinance Index increased 13 percent from the previous week and was 188 percent higher than the same week one year ago. The share of total applications that were for refinancing increased to 61.9 percent from 59.5 percent the previous week.  

The Purchase Index, which had declined in four of the previous five weeks, posted a 5.0 percent increase on a seasonally adjusted basis and added 2.0 percent unadjusted. It was up 15 percent compared to the same week in 2018.

 

Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed

 

 

Joel Kan, Associate Vice President of Economic and Industry Forecasting, commented, "Mortgage applications increased to their highest level in over a month, as both purchase and refinance activity rose despite another climb in mortgage rates. Positive data on consumer sentiment, and growing optimism surrounding the U.S. and China trade dispute, were behind last week's rise in the 30-year fixed mortgage rate to 4.03 percent," he said. "Refinance applications jumped 13 percent to the highest level in five weeks, as conventional, FHA, and VA refinances all posted weekly gains. With rates still in the 4 percent range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020."  

Added Kan, "Last week was a solid week for homebuyers. Purchase applications increased 2 percent and were 15 percent higher than a year ago. Low supply and high home prices remain a key characteristic of this fall's housing market, which is why the largest growth in activity continues to be in loans with higher loan balances."

The average loan balance was $315,900 during the week.  Purchase loans averaged $334,800.

The FHA share of total applications jumped from 11.8 percent to 13.1 percent and the VA share increased to 12.7 percent from 12.0 percent.  USDA applications dipped to 0.5 percent of the total from 0.6 percent the previous week.  

Contract interest rates moved higher for fixed-rate mortgages (FRM) as did most, but not all effective rates. The average contract interest rate for 30-year FRM with loan balances at or below the conforming limit of $484,350 increased to 4.03 percent from 3.98 percent.  Points fell from 0.37 to 0.31 but the effective rate increased.   

The average contract interest rate for jumbo 30-year FRM, loans with balances that exceeded the conforming limit, ticked up 1 basis point to 3.98 percent.  Points decreased to 0.22 from 0.24 leaving the effective rate unchanged from the prior week.

FHA backed 30-year FRM had a rate that averaged 3.85 percent, up from 3.79 percent the prior week. Points increased to 0.28 from 0.21 and the effective rate moved higher.

The rate for 15-year FRM added 5 basis points during the week to an average of 3.43 percent. Points declined to 0.28 from 0.31 and the effective rate increased.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.40 percent from 3.43 percent, with points decreasing to 0.17 from 0.21 resulting in a lower effective rate. The ARM share of activity fell to 4.9 percent of total applications, the lowest since early August.  The prior week the share was 5.2 percent.

MBA's Weekly Mortgage Applications Survey been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.

 

 

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