Independence Day played the usual holiday havoc on mortgage applications data, but some trends were maintained. The Mortgage Bankers Association (MBA) said its seasonally adjusted Market Composite Index, a measure of application volume, declined 2.4 percent during the week ended July 25 (including an adjustment to account for the holiday) when compared to the previous week while it dropped 22 percent on an unadjusted basis.
The Refinance Index, which had been flying high in recent weeks due to declining interest rates, lost 7.0 percent on a week-over-week basis, but MBA noted, for the first time in recent memory, the year-over-year change - an increase of 88 percent. The refinance share of mortgage activity decreased to 48.7 percent of total applications from 51.0 percent the previous week.
The seasonally adjusted Purchase Index pulled out a 2.0 percent gain despite the holiday slowdown although it was down 18 percent on an unadjusted basis. It was 6.0 percent higher than during the same week in 2018. The unadjusted purchase index has maintained a year-over-year edge every week since early February.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Mortgage applications were down slightly, even after adjusting for the July 4th holiday, as we saw opposing moves in purchase and refinance applications over the week. Purchase applications increased from the previous week and were up 5 percent from a year ago, a continuation of the strong annual growth that we saw in the first half of 2019. Refinance activity decreased over 6 percent and the refinance share of applications fell back below 50 percent, even as the 30-year, fixed-rate declined 3 basis points to 4.04 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.
"Borrowers have been less sensitive to low rates as many borrowers have either recently refinanced or are likely waiting for rates to fall even further. Other mortgage rates in our survey were unchanged or slightly higher than in the previous week."
The FHA share of total applications remained unchanged from 10.1 percent during the week ended June 28 and the VA share increased to 13.2 percent from 12.8 percent. USDA applications accounted for 0.7 percent of the total compared to 0.6 percent the preceding week.
As Kan indicted, mortgage rates were mixed on both a contract and an effective basis. The average rate for 30-year, fixed-rate mortgages (FRM) with origination loan balances at or below the conforming limit of $484,350 decreased to 4.04 percent from 4.07 percent, with points increasing to 0.37 from 0.36. The effective rate decreased.
The average contract rate for 30-year jumbo FRM, loans with balances above the conforming limit, rose 3 basis point to 4.03 percent. Points increased to 0.27 from 0.25 and the effective rate moved higher.
Thirty-year, FRM backed by the FHA maintained a 3.97 percent contract rate with 0.30 point from the prior week. The effective rate, however, increased.
The average contract interest rate for 15-year FRM was unchanged at 3.42 percent. Points were also unchanged at 0.32 and the effective rate was flat.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) jumped 10 basis points to 3.56 percent from 3.46 percent, and points increased to 0.28 from 0.26. The effective rate was also up. ARMs gained a slight bit of mortgage share, moving from 5.2 percent to 5.3 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.