MBA: Mortgage applications retreat 5.8%

The unadjusted Purchase Index plummets 10% from previous week

Mortgage applications retreated 5.8% for the week ending Dec. 14, 2018, according to new data from the Mortgage Bankers Association's weekly Mortgage Applications Survey.

“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said. “Purchase applications decreased almost 7% over the week and refinances decreased around 2%, led by a larger decline in government refinances compared to conventional refinances.”

On an unadjusted basis, the Mortgage Composite index decreased 7% from the previous week.

“With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action. The average loan balance for refinance loans increased to its highest level since September 2017,” Kan concluded.

The Refinance Index fell 2% from the previous week, and the unadjusted Purchase Index plummeted 10% from last week but was 2% higher the same week in 2017. The seasonally adjusted Purchase Index fell backwards 7% from the previous week.

The refinance share of mortgage activity grew to 43.5% of total applications, marking its highest reading since February of this year.

The adjustable-rate mortgage share of activity increased to 7.9% of total applications.

The Federal Housing Administration share of mortgage apps decreased from last week’s 10.8% to 10.4%, and the Veterans Affairs' share of applications also fell, sliding from 10.2 % the previous week to 9.9% this week.

The Department of Agriculture share of total applications fell backwards, decreasing from 0.7% last week to 0.6% this week.

The MBA reported that mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.94% from 4.96% the previous week. This is the lowest reading since September 2018.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased from last week’s 4.8% to 4.74% this week.  Once again, this happens to be the lowest reading since September 2018.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 4.97% last week to 4.95% this week. Unfortunately, this is once again the lowest reading since September of this year.

The average contract interest rate for 15-year fixed-rate mortgages declined, falling from 4.41% last week to 4.37% this week. This percentage also marks the lowest reading since September.

Lastly, the average contract interest rate for 5/1 ARMs retreated to 4.17%, down from 4.24% last week.  Non-surprisingly, this percentage is also the lowest reading since September.

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