Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 21, 2020. This week’s results include an adjustment for the Washington Birthday (Presidents’ Day) Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 152 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago.

“Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.”

Added Fratantoni, “As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility. Next week’s results will show the impact this drop in Treasuries had on mortgage activity.”

The refinance share of mortgage activity decreased to 60.8 percent of total applications from 63.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications.

The FHA share of total applications increased to 10.5 percent from 9.5 percent the week prior. The VA share of total applications decreased to 11.8 percent from 12.1 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.73 percent from 3.77 percent, with points decreasing to 0.27 from 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater
than $510,400) decreased to 3.72 percent from 3.79 percent, with points increasing to 0.23 from 0.19 (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 decreased to 3.84 percent from 3.86 percent, with points increasing to 0.26 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.18 percent from 3.22 percent, with points decreasing to 0.23 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.21 percent from 3.23 percent, with points increasing to 0.28 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
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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.