Mortgage applications decrease again despite rates falling
Mortgage applications fell 3.1% from one week earlier even with another decrease in rates, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Aug. 30 found that the refinance index decreased 7% from the previous week and was 152% higher than the same week one year ago. The refinance share of mortgage activity decreased to 60.4% of total applications from 62.4% a week ago.
"Ongoing trade tensions between the U.S. and China led to volatile, yet declining Treasury rates last week, causing the 30-year fixed mortgage rate to fall to 3.87%, its lowest level since November 2016. Despite lower borrowing costs, refinances were down from its recent peak two weeks ago, but still remained over 150% higher than last August, when rates were almost a percentage point higher," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
"Purchase applications increased 1% last week and were 5% higher than a year ago. Consumers continue to act on these lower rates, but the volatility in the market is likely leading some borrowers to pause refinancing and buying decisions."
Adjustable-rate mortgage activity decreased to 5.7% from 6.1% of total applications and the share of Federal Housing Administration-insured loan applications decreased to 10.2% from 10.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 11.3% from 9.9% and the U.S. Department of Agriculture/Rural Development share increased to 0.6% from 0.5% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 7 basis points to 3.87%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate increased 5 basis points to 3.94%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.8%. For 15-year fixed-rate mortgages, the average decreased 2 basis points to 3.29%. The average contract interest rate for 5/1 ARMs decreased 2 basis points to 3.4%.