Fewer conventional refis cause drop in application volume
A dip in conventional mortgage refinance demand drove mortgage application volume down compared with one week earlier, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Feb.14 found the refinance index decreased 8% from the previous week and was 165% higher than the same week one year ago. The refinance share of mortgage activity decreased to 63.2% of total applications from 65.5% the previous week.
"Treasury yields moved slightly higher last week, despite uncertainty surrounding the economic impact from the spread of the coronavirus. The 30-year fixed mortgage increased 5 basis points to 3.77% as a result, causing refinance applications — driven by a 11% drop in applications for conventional refinances — to fall," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
"Even with an 8% decline, the refinance index was still at its third highest reading so far this year. Government refinance activity, which tends to lag movements in the conventional market, bucked the overall trend, as VA loan refinances jumped 23%."
Total mortgage application activity fell 6.4% on a seasonally adjusted basis and 5% on an unadjusted basis from the prior week. Compared with the same week last year on an unadjusted basis, application activity is up 75%.
On an unadjusted basis, mortgage loan applications to purchase a home increased both week-to-week and year-over-year.
The unadjusted purchase index increased 2% compared with the previous week and was 10% higher than the same week one year ago.
However, when seasonally adjusted, the purchase application index decreased 3% from one week earlier.
Adjustable-rate mortgage activity decreased to 5.4% from 6.2% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 9.5% from 9.7% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 12.1% from 10.1% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.4%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased 5 basis points to 3.77%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate increased 4 basis points to 3.79%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 2 basis points to 3.86%. For 15-year fixed-rate mortgages, the average increased 2 basis points to 3.22%. The average contract interest rate for 5/1 ARMs increased 2 basis points to 3.23%.