The surge in mortgage applications last week, fostered by a 6.0 percent increase in refinancing, was short-lived.  Despite slightly lower interest rates, the Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of applications received by lenders, has resumed its downward spiral, with volume decreasing for the 17th time in the last 22 weeks.

During the week ended August 24 the total volume of applications was 1.7 percent lower than the previous week on a seasonally adjusted basis.  The decline was 3.0 percent on an unadjusted basis.  The Purchase Index was down 1 percent from the week ended August 17 on an unadjusted basis and 3.0 percent unadjusted.  The unadjusted Purchase Index remained 3.0 percent higher than during the same week in 2017.  The Refinance Index also dropped 3.0 percent when compared to the previous week, however, the share of all applications that were for refinancing was unchanged at 38.7 percent.


Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed



The distribution of applications across loan products was identical to that of a week earlier; the FHA share was 10.2 percent, VA applications had a 10.5 percent share, and the USDA allocation was 0.7 percent.

Mortgage interest rates were down or flat when compared to the prior week.  The average contract rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the mandated limit of $453,100 was 4.78 percent with 0.46 point.  This was a decrease from the August 17 level of 4.81 percent with 0.42 point and the lowest rate in more than a month.  The effective rate was also down.

The jumbo version of the 30-year FRM, loans with balances larger than the conforming limit, maintained the same 4.68 percent rate as the prior week.  Points increased to 0.30 from 0.28 but the effective rate was also unchanged.

The largest rate change was with the 30-year FRM backed by the FHA.  That rate fell to 4.77 percent from 4.82 percent while points rose to 0.75 from 0.69.  The effective rate was also lower.

Fifteen year FRM had an average rate of 4.24 percent with 0.48 point.  The previous week the rate was 4.25 percent with 0.47 point. The effective rate decreased.

The 5/1 adjustable rate mortgage (ARM) had an average rate of 3.95 percent compared to 4.00 percent a week earlier.  Points fell from 0.52 to 034 and the effective rate also declined.  The ARM share of applications decreased to 6.3 percent from 6.5 percent.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage 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.