Mortgage Applications Fall 3.2% as Refis and Purchases Decline
Mortgage applications were down for the first time this year as both purchase and refinance activity decreased.
The Mortgage Bankers Association's market composite index fell 3.2% on a seasonally adjusted basis for the period ending Jan. 23, which included an adjustment for the Martin Luther King holiday. A week earlier, mortgage loan application volume was up by 14.2%.
The refinance gauge fell 5% from the previous week, while purchase activity dropped 0.1% during this time period.
However, the seasonally adjusted government index rose 9.2% week over week to its highest level since July 2013. Early in January, there was an announcement of a half-percentage point reduction in the Federal Housing Administration's annual premium.
Refinances for the week ending Jan. 23 accounted for 72% of total applications. Veterans Affairs loans represented 10.7% of overall volume and FHA loan applications consisted of 9.1% of the total. Additionally, the adjustable-rate mortgage share was 5.7%, while the USDA share was 0.7%, the Washington-based trade group said.
The average contract interest rate for 30-year fixed mortgages with conforming loan balances below $417,000 increased three basis points, to 3.83%. Jumbo loan balances above $417,000 saw the average 30-year fixed rate rise one basis point, to $3.87%. Thirty-year mortgages backed by the FHA were up five basis points, to 3.71%. Meanwhile, the average interest rate for 15-year fixed mortgages elevated five basis points, to 3.15%.
The MBA said because of a revised data submission the seasonally adjusted market index for week ended Jan. 9 increased 46.7% rather than the initially reported 49.1%. For the week ended Jan. 16, the seasonally adjusted market index increased 16.1% rather than 14.2% as initially reported.