Although mortgage rates are at their lowest level in almost two months, application volume declined 0.2% on a seasonally adjusted basis for the week ending Jan. 24 according to the Mortgage Bankers Association. The week's data were adjusted for Martin Luther King Day.
Rates dipped last week as a result of the poor jobs report and because of reports indicating economic growth in China is slowing, market observers are noting.
So far the lower rates are not having any effect on refinance application activity. Refi application volume is down 2% on an unadjusted basis and its market share of 62%, down from 64% the week before, is the lowest since September.
The seasonally adjusted Purchase Index increased 2%. But on an unadjusted basis purchase app volume is 12% lower than the same week one year ago.
"It will be interesting to see if weather-related issues impact applications and home sales in the short run. What’s clear is that interest rates have fallen steadily since the beginning of the year opening up an opportunity for mortgage rates that we haven’t seen since November of last year," says Bill Banfield, a vice president at Quicken Loans.
The rate inversion between conforming and jumbo loans has returned; last week the rates for both were at 4.57%.
The average contract rate for the 30-year conforming fixed-rate mortgage is at 4.52%, down five basis points. For the 30-year FRM jumbo it is at 4.47%, a drop of 10 bps, the MBA says. The organization uses $417,000 as the conforming loan limit for survey purposes.
On Federal Housing Administration-insured loans, the average contract rate is down six bps to 4.18%, while for the 15-year FRM, the rate is down nine bps at 3.59%.
Meanwhile, the share of adjustable-rate mortgage loan applications remains in the range of 7%. The average contract rate for the 5/1 ARM is 3.25%, an increase of two bps.