Economist Not Worried About Application Volume Decline

Mortgage application volume declined for the third consecutive week, but one observer seems not to be concerned. The Mortgage Bankers Association’s Market Composite Index declined 3.8% on a seasonally adjusted basis for the week ended Feb. 22, as purchase volume is at its lowest point since late December. The MBA did not adjust the numbers in regards to Presidents’ Day.

Quicken Loans chief economist Bob Walters said, “While you try to take a holistic view to trends, it certainly does start to whet your interest when you see three weeks of application declines. The fact remains, however, that rates remain low, home prices are at reasonable levels and the market is slowly regaining its health.

“I do not expect to see any lingering effects from the lagging application data.”

The seasonally adjusted purchase index is down 5% from the previous week. But when compared with the same week last year on an unadjusted basis, the purchase index is 14% higher.

The MBA’s Refinance Index, which is not adjusted, was down 3% from the previous week. The share of refi applications remained at 77%, while the HARP share of refis increased one percentage point to 30%.

The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) decreased one basis point to 3.77%. Federal Housing Administration-insured loans had an average contract rate for the week of 3.54%, unchanged from the week of Feb. 15.

Jumbo 30-year FRMs saw the average contract rate decline one basis point to 3.93%. The 15-year FRM remained for the second consecutive week at 3.03%.

Adjustable-rate mortgages made up a mere 4% of the week’s loan applications, with the average contract rate for the 5/1 ARM falling one basis point to 2.65%.