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MBA: Geopolitical headwinds dampen mortgage application growth

The Market Composite Index drops 7.3% from the previous week

As geopolitical turmoil mounts, mortgage applications retreated further for the week ending April 24, 2019, according to the newest data from the Mortgage Bankers Association.

According to MBA's weekly Mortgage Applications Survey, on an unadjusted basis, the Market Composite Index dropped 7.3% from the previous week.

 “The 30-year fixed mortgage rate has risen 10 basis points in three weeks and is now at its highest level in over a month. Borrowers remain extremely sensitive to rate changes, which is why there has been a 28% drop in refinance applications over this three-week period. Purchase activity also declined but remains almost 3% higher than a year ago,” MBA Senior Vice President and Chief Economist Mike Fratantoni said. “Borrowing costs have recently drifted higher because of ebbing geopolitical concerns, as well as signs of strengthening in the U.S. economy, including the recent data pointing to robust retail sales.”

Additionally, Fratantoni noted that although the strong economy and job market are likely to keep buyer interest high, rising mortgage rates could add pressure to the budgets of some would-be buyers.

The Refinance Index declined 11% from the previous week and the unadjusted Purchase Index fell 3% from a week ago but is still 3% higher than the same week in 2018. Lastly, the seasonally adjusted Purchase Index fell backwards 4% from the week before.

Here's a more detailed breakdown of this week's mortgage application data:

  • The refinance share of mortgage activity decreased to 39.4% of total applications, falling from 41.5% the previous week.
  • The adjustable-rate mortgage share of activity retreated to 6.4% of total applications.
  • The Federal Housing Administration's share of mortgage apps rose to 9.9% from last week’s 9.4%.
  • The Veterans Affairs' share of applications slid to 11.3% from last week’s 11.6%.
  • The Department of Agriculture's share of total applications held its steady from last week’s 0.6%.
  • Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased from 4.44% to 4.46%.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased from last week’s 4.33% to 4.35%.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA moved forward from last week’s 4.43 to 4.49%.
  • The average contract interest rate for 15-year fixed-rate mortgages grew to 3.87% from 3.84% the week prior.
  • The average contract interest rate for 5/1 ARMs increased to 3.92% from last week’s 3.88%.

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