Decline in refinances brings down mortgage application volume
Mortgage applications decreased 2.5% from one week earlier as refinance activity appears to decelerating, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 11 found that the refinance index decreased 4% from the previous week, although it was 30% higher than the same week one year ago. This week's results include an adjustment for the Labor Day holiday.
The refinance share of mortgage activity decreased to 62.8% of total applications from 63.1% the previous week.
"Mortgage rates held steady last week, and the 30-year fixed rate — at 3.07% — has now stayed near the 3% mark for the past two months," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "A 5% decline in conventional refinances pulled the overall index lower, but activity was still 30% higher than last year. With the flurry of refinance activity reported over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizeable drop in rates."
The seasonally adjusted purchase index decreased 1% from one week earlier, while the unadjusted purchase index decreased 12% compared with the previous week and was 6% higher than the same week one year ago.
Even with that decline in purchase volume, "the underlying trend remains strong," Kan said. "Purchase activity has outpaced year-ago levels for 17 consecutive weeks, with a stronger growth in loans with higher balances pushing MBA's average loan size to a new survey high of $370,200."
Adjustable-rate mortgage activity increased to 2.3% from 2.2% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 9.7% from 10.2% the week prior.
Meanwhile, the share of applications for Veterans Affairs-guaranteed loans increased to 12.3% from 11.2% and the U.S. Department of Agriculture/Rural Development share decreased to 0.5% from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.07%. At the same time, 30-year FRMs with jumbo loan balances (greater than $510,400), had an increase in the average contract rate of 1 basis point to 3.41%.
For FHA-insured 30-year FRMs, the average contract interest rate remained unchanged at 3.16%. As for 15-year FRMs, the average decreased 1 basis point to 2.61%. The average contract interest rate for 5/1 ARMs increased to 3.2% from 2.99%.