Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 8.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 19, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 8.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9 percent compared with the previous week. The Refinance Index decreased 12 percent from the previous week and was 76 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 18 percent higher than the same week one year ago.

“Mortgage applications decreased 9 percent last week, with both refinance and purchase activity falling despite the 30-year fixed rate mortgage staying at 3.30 percent – the record low in MBA’s survey,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinance applications dropped to their lowest level in three weeks, but the index remained 76 percent higher than a year ago. Despite the decline last week, MBA still anticipates refinance originations to increase to $1.35 trillion in 2020 – the highest level since 2012.”

Added Kan, “Even with high unemployment and economic uncertainty, the purchase market is strong. Activity has climbed above year-ago levels for five straight weeks and was 18 percent higher than a year ago last week. One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market. Additional housing inventory is needed to give buyers more options and to keep home prices from rising too fast.”

The refinance share of mortgage activity decreased to 61.3 percent of total applications from 63.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.1 percent of total applications.

The FHA share of total applications increased to 11.4 percent from 11.0 percent the week prior. The VA share of total applications decreased to 11.0 percent from 11.5 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.30 percent, with points increasing to 0.32 from 0.29 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.62 percent from 3.67 percent, with points increasing to 0.29 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.35 percent from 3.33 percent, with points decreasing to 0.22 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.81 percent from 2.80 percent, with points increasing to 0.30 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.09 percent from 3.07 percent, with points decreasing to 0.01 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

If you would like to purchase a subscription of MBA’s Weekly Applications Survey, please visit www.mba.org/WeeklyApps, contact mbaresearch@mba.org or click here.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.