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MBA: Mortgage applications fall nearly 10%

Economic concerns and uncertainty around the government shutdown drove rates lower

Mortgage applications retreated 9.8% for the week ending Dec. 28, 2018, according to new data from the Mortgage Bankers Association's weekly Mortgage Applications Survey.

Notably, this week’s reading includes adjustments to account for the Christmas holiday.

“Mortgage applications fell over the past two weeks – even as the 30-year fixed-rate mortgage decreased to 4.84%, its lowest since September 2018,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said. “Investors continued to show a preference for safer U.S.Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower.”

On an unadjusted basis, the Mortgage Composite index decreased 9.8% from two weeks prior.

“Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped,” Kan continued. “Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA application processing times likely contributed to the weakness in activity.”

The Refinance Index dropped 12% from two weeks ago and the unadjusted Purchase Index plummeted 46% from two weeks ago, but was only 6% lower than the same week in 2017. The seasonally adjusted Purchase Index also declined, falling 8% from two weeks before.

The report notes, that although the index changes were calculated two weeks prior, the following compositional and rate

measures are relative to last week only.

The refinance share of mortgage activity fell to 42.7% of total applications, retreating from 43.6% the previous week. However, the adjustable-rate mortgage share of activity held steady at 7.6% of total applications.

The Federal Housing Administration share of mortgage apps rose slightly from last week’s 9.7% to 10%, and the Veterans Affairs' share of applications also rose, increasing from 10.1% the previous week to 11% this week.

The Department of Agriculture share of total applications fell backwards, declining from 0.6% last week to 0.7% 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 4.84% from 4.86% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased from last week’s 4.59% to 4.72% this week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 4.91% last week to 4.86% this week.

The average contract interest rate for 15-year fixed-rate mortgages fell, decreasing from 4.31% last week to 4.25% this week.

Lastly, the average contract interest rate for 5/1 ARMs fell to 4.16%, sliding from 4.23% last week.  

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