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Mortgage applications slide despite last week's spike

Mortgage applications decline by 1.2% from last week

Mortgage applications fell 1.2% from last week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.

This means on a seasonally adjusted basis, the index slid by 1.2% for the week ending on Jan. 17, 2020.

On an unadjusted basis, the index inched forward 0.4% compared to the previous week.

Joel Kan, the associate vice president of economic and industry forecasting at MBA, said although applications fell after two weeks of healthy increases, they still remain at an elevated level.

“The purchase market has started 2020 on a strong note, running 8% higher than the same week a year ago,” Kan said. “Refinance applications remained near the highest level since October 2019, as the 30-year fixed rate was unchanged at 3.87%, while the 15-year fixed rate decreased to its lowest level since November 2016.”

“Even with more positive developments surrounding the U.S. and China trade negotiations and healthy retail sales data, investors seemed cautious and maintained their demand for safer U.S. Treasuries, which kept yields lower,” Kan said. “Our expectation is that rates will stay along this same narrow range.”

According to the organization, both the Refinance Index and the seasonally adjusted Purchase Index fell by 2% last week, while the unadjusted Purchase Index decreased by 4%.

That being said, the Refinance Index and the unadjusted purchase index were 119% and 8% higher than the same time period in 2019, respectively.

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

  • The refinance share of mortgage activity decreased to 61.6% from last week’s 62.9%.
  • The adjustable-rate mortgage share of activity increased to 4.6% of total applications.
  • The Federal Housing Administration’s share of mortgage apps retreated to 11.3% from last week’s 12.7%.
  • The Department of Veterans Affairs share of applications rose to 13.8% from last week’s 12.1%.
  • The Department of Agriculture’s share of total applications held steady at 0.5%.
  • Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.87%.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.87% from last week’s 3.83%.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA held its ground at 3.78%.
  • The average contract interest rate for 15-year fixed-rate mortgages fell to the lowest level since November 2016, coming in at 3.25%.
  • The average contract interest rate for 5/1 ARMs declined to 3.29% from last week’s 3.35%.

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