Mortgage applications drop, although rates fell to 10-month low
Mortgage applications decreased 2.5% from one week earlier, even as interest rates fell to their lowest levels in 10 months, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Feb. 1 found that the refinance index increased 0.3% from the previous week. The previous week's results included an adjustment for the Martin Luther King Jr. Day holiday.
The refinance share of mortgage activity decreased to 41.6% of total applications from 42% the previous week.
"Mortgage rates for all loan types declined last week, with the 30-year fixed mortgage rate falling seven basis points to 4.69%, the lowest rate since April 2018," Joel Kan, the MBA's associate vice president of industry surveys and forecasts, said in a press release.
The seasonally adjusted purchase index decreased 5% from one week earlier, while the unadjusted purchase index increased 13% compared with the previous week and was 2% lower than the same week one year ago.
"Despite more favorable borrowing costs, and after a three-week surge in activity, purchase applications have slowed over the past two weeks, and are now almost 2% lower than a year ago. However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward. Refinance applications saw a very slight increase compared to the previous week, despite the broad decline in rates," Kan said.
Adjustable-rate loan activity decreased to 7.8% from 7.9% of total applications, while the share of Federal Housing Administration-guaranteed loans remained unchanged from 10.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 10% from 10.7% and the U.S. Department of Agriculture/Rural Development share increased to 0.5% from 0.4% 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 4.69%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 10 basis points to 4.5%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 points to 4.7%. For 15-year fixed-rate mortgages, the average decreased 5 basis points to 4.11%. The average contract interest rate for 5/1 ARMs decreased to 4.04% from 4.14%.