Although the week ended September 7 was shortened by the Labor Day holiday, mortgage application volume managed an increase.  It was the first week-over-week gain since Early August.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, rose 2.0 percent on a seasonally adjusted basis from one week earlier although it fell 9 percent before adjustment.  

As interest rates continue to fall the pace of refinancing has become less frenetic, but that MBA index was still up 0.4 percent from the previous week and was 169 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 60.0 percent of total applications from 60.4 percent the previous week.

The seasonally adjusted Purchase Index increased 5.0 percent from one week earlier but was 8.0 percent lower on an unadjusted basis. Activity was 9.0 percent above the level the same week a year earlier. 


Refi Index vs 30yr Fixed



Purchase Index vs 30yr Fixed



"Mortgage rates continued to decline over the holiday-shortened week, with the 30-year fixed rate decreasing five basis points and remaining near three-year lows," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Refinances were essentially unchanged, up just 0.4 percent, but August overall was the strongest month of activity so far in 2019. Purchase applications rose around 5 percent, with increases for both conventional and government applications."

Added Kan, "Purchase activity was 9 percent higher than last year, continuing the trend seen most of the year of solid year-over-year gains."

The FHA share of total applications decreased to 9.3 percent from 10.2 percent the previous week and the VA share increased to 11.9 percent from 11.3 percent. The USDA share continues to bounce between 0.5 and 0.6 percent, coming out on the short end last week.  The average origination balance of mortgages during the week was $337,600 and purchase mortgages averaged $325,100, both slightly higher than during the week ended August 30.

Although most contract interest rates declined, some effective rates ticked higher during the week. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $484,350 declined to 3.82 percent from 3.87 percent.  Points increased to 0.44 from 0.34, but the effective rate moved lower.

Jumbo 30-year FRM, loans with balances exceeding the conforming limit, had a contract rate of 3.84 percent, a 10-basis point decline from the previous week. Points increased to 0.34 from 0.24 and the effective rate was down.

The average contract interest rate for 30-year FRM backed by the FHA decreased to 3.76 percent from 3.80 percent and points dipped to 0.31 from 0.32.  The effective rate decreased from the prior week.

The contract rate for 15-year FRM ticked own to 3.28 percent from 3.29 percent the previous week.  However, an increase in points from 0.32 to 0..47 pushed the effective rate higher

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.42 percent from 3.40 percent, with points increasing to 0.48 from 0.27. The effective rate also increased. The share of applications that were for ARMs was 5.6 percent compared to 5.7 percent the prior week.

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.