Despite the Veterans' Day holiday which shortened the work week of November 15, purchase mortgage applications gained momentum. The Mortgage Bankers Association said its Purchase Index rose 7 percent on a seasonally adjusted basis during the week although it was down 8.0 percent before adjustment. It was also up by 7 percent compared to the same week in 2018. The week's results were adjusted to account for the holiday.
Overall however, application volume was in a typical holiday week slump. The seasonally adjusted Market Composite Index declined 2.2 percent on a seasonally adjusted basis compared to the week ended November 8 and was 14 percent lower on an unadjusted basis due entirely to a decline of 8 percent in the Refinance Index. That measure remained elevated by 152 percent compared to the same week in 2018. The share of refinancing applications slipped from 61.9 percent the prior week to 59.5 percent.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"U.S. and China trade anxieties and protests in Hong Kong pulled U.S. Treasuries lower last week, and the 30-year fixed mortgage rate followed the same path, dipping below 4 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Despite lower rates, mortgage applications decreased 2.2 percent, driven by an 8 percent slide in refinance activity. Rates have stayed in the same narrow range of around 4 percent since July, so we may be starting to see the expected slowdown in refinancing as the pool of eligible homeowners shrinks."
Added Kan, "Purchase applications were 7 percent higher than a year ago, which adds another solid data point to the recent increases in new home sales and housing starts. There may be signs that housing inventory is starting to meaningfully rise, which will help with affordability and provide more choices for potential homebuyers."
Average loan sizes fell during the week. Loans of all types averaged $309,800 and those for home purchases had a mean of $330,500.
The FHA share of total applications decreased to 13.0 percent from 13.1 percent the prior week and the VA share rose to 12.9 percent from 12.7 percent. USDA applications accounted for 0.5 percent as they had the previous week.
Both average contract rates and effective rates declined for all fixed-rate products. Thirty-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $484,350 decreased to 3.99 percent from 4.03 percent, with points increasing to 0.33 from 0.31.
The rate for jumbo 30-year FRM with balances that exceeded the conforming limit declined from 3.98 percent to 3.93 percent. Points increased to 0.28 from 0.22.
The average rate for 30-year FRM backed by the FHA was 3.80 percent with 0.32 point. The prior week it was 3.85 percent with 0.28 point.
The rate for 15-year FRM decreased by 3 basis points to 3.40 percent. Points rose to 0.31 from 0.28.
Interest rates increased for adjustable rate mortgages (ARMS). The 5/1 ARM averaged 3.51 percent, up from 3.40 percent, and points went to 0.23 from 0.17. The effective rate increased from the prior week. The ARM share of activity decreased to 4.6 percent of total applications from 4.9 percent a week earlier.
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.