Purchase applications continue their strong run: MBA

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Mortgage applications decreased 3.3% from one week earlier, but purchase activity momentum persisted with home sales remaining a bright spot in the economic recovery, according to the Mortgage Bankers Association.

"Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "The rise in rates dampened refinance activity, but purchase applications continued their strong run and were 27% higher than a year ago — the third straight month of year-over-year increases."

The MBA's Weekly Mortgage Applications Survey for the week ending Aug. 14 found that the refinance index decreased 5% from the previous week and was 38% higher than the same week one year ago. The refinance share of mortgage activity decreased to 64.6% of total applications from 65.7% the previous week.

Meanwhile, the seasonally adjusted purchase index increased 1% from one week earlier, while the unadjusted purchase index decreased 1% percent compared with the previous week.

"Conventional purchase applications drove last week's increase, while applications for government loans decreased," Kan said. "The housing market remains a bright spot in the current economic recovery and these results, combined with July data on housing starts and homebuilder optimism, suggest that housing supply could be increasing to better meet the strong demand for buying a home."

Adjustable-rate mortgage activity remained unchanged at 2.7% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 10.3% from 10.4% the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 11.2% from 11.4% and the U.S. Department of Agriculture/Rural Development share remained unchanged 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) increased 7 basis points to 3.13%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate increased 1 basis point to 3.41%.

However, the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 basis points to 3.16%. For 15-year fixed-rate mortgages, the average increased 7 basis points to 2.73%. The average contract interest rate for 5/1 ARMs decreased 5 basis points to 2.95%.

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Mortgage applications Purchase Refinance Housing market Mortgage Bankers Association FHA The VA