It was yet another holiday shortened week, this time occasioned by Martin Luther King's birthday, and mortgage application activity was down. The Mortgage Bankers Association's (MBA's) Market Composite Index, a measure of mortgage loan application volume, decreased 3.0 percent on a seasonally adjusted basis from one week earlier and was down 10 percent on an unadjusted basis. The data was further adjusted to account for the holiday.
The seasonally adjusted Purchase Index was 2 percent lower than during the week ended January 18 and it declined by 6 percent on an unadjusted basis. The unadjusted index was also down 7 percent from the same week in 2018. The Refinance Index fell 6 percent compared to the previous week and the share of applications that were for refinancing was 42.0 percent compared to 44.5 percent the previous week.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
The lower index levels were, as explained by Joel Kan, MBA's Associate Vice President of Industry Surveys and Forecasts, due less to the calendar than to mortgage rates. During the week encompassing the MLK holiday last year the composite index rose 4.5 percent and both the Purchase and the Refinance Indices moved higher.
"Mortgage applications for purchase and refinances were lower over the past week, as rates nudged higher," Kan said. "After two weeks of decreases, the purchase index still remained roughly 6 percent above its long-run average, which is good news with the spring buying and selling season almost underway. Despite ongoing supply and affordability constraints, the healthy job market and underlying demographic fundamentals both point to gradual purchase growth in the coming months."
Added Kan, "Refinance activity had seen a small resurgence in the past few weeks, but there still remains only a small share of borrowers left to gain from rates at the current levels."
The FHA share of total applications was unchanged at 10.5 percent. The VA share of total applications increased to 10.7 percent from 10.3 percent and the USDA share of total applications remained unchanged from 0.4 percent, probably due to the government shutdown which has affected processing of Agriculture Department loans.
Interest rates were mixed. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming loan limit of $484,350 increased to 4.76 percent from 4.75 percent and points from 0.44 to 0.47. The effective rate moved higher.
The average rate for 30-year jumbo FRM, loans with balances that exceed the conforming limit, ticked up 1 basis point to 4.60 percent. Point dipped to 0.24 from 0.25 leaving the effective rate unchanged.
Thirty-year FRM backed by the FHA had an average rate of 4.77 percent with 0.58 point. The previous week the rate was 4.82 percent, with 0.62 point. The effective rate decreased.
The average contract interest rate for 15-year FRM rose by 4 basis points to 4.16 percent. Points fell to 0.46 from 0.53 but the effective rate moved higher.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) rose to 4.14 percent from 4.12 percent while points fell to 0.37 from 0.42. The effective rate was unchanged from the prior week. The ARM share of activity retreated from 8.3 percent to 7.9 percent of total applications.
MBA's Weekly Mortgage Applications Survey has 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.