The Mortgage Bankers Association (MBA) reported the largest
increase in applications since June in its Weekly Mortgage Applications Survey
for the week ending Sept. 15. Mortgage applications jumped 5.4 percent
from the previous week’s results, which included an adjustment for the Labor
Day holiday.
To put this in perspective, the last time applications rose
more than 3 percent in a single week was the week ending June 9, when MBA reported
an increase of 7.2 percent. Most of its weekly reports since then have shown
declines of varying degrees save for the occasional modest increase.
MBA measures loan application volume using its Market
Composite Index, which provides both seasonally adjusted weekly results and
unadjusted results. On an unadjusted basis, the Index increased 16 percent for the
week ending Sept. 15.
MBA Vice President and Deputy Chief Economist Joel Kan provided
context for the most recent uptick in applications.
“Mortgage applications increased last week, despite the
30-year fixed mortgage rate edging back up to 7.31 percent – its highest level
in four weeks,” Kan said in a release. “Purchase applications increased for
conventional and FHA loans over the week but remained 26 percent lower than the
same week a year ago, as homebuyers continue to face higher rates and limited
for-sale inventory, which have made purchase conditions more challenging.
Refinance applications also increased last week but are still almost 30 percent
lower than the same week last year.”
MBA’s Refinance Index increased 13 percent from the week
prior but was 29 percent lower than the same week one year earlier. The
refinance mortgage activity jumped to 31.6 percent of total applications compared
to 29.1 percent one week earlier. Meanwhile, the adjustable-rate mortgage (ARM)
share of activity dropped to 7.2 percent of total applications.
The Purchase Index increased 2 percent from the previous
week on a seasonally adjusted basis but went up by 12 percent on an unadjusted
basis compared with the previous week. This total was 26 percent lower than the
same week one year ago.
“The average loan size on a purchase application was
$416,800, the highest level in six weeks,” Kan added. “Home prices in many
markets have been supported by low inventory and resilient housing demand for
available homes.”
The share of Federal Housing Administration (FHA)
applications did not change from the previous week, holding at 14.2 percent, as
did the U.S. Department of Agriculture’s (USDA) share of total applications, which
remained unchanged at 0.4 percent. Veteran Administration (VA) loan
applications declined slightly to 11 percent from 11.3 percent the previous week.
The average contract interest rate for 30-year fixed-rate
mortgages with conforming loan balances ($726,200 or less) rose to 7.31 percent
from 7.27 percent, with points remaining unchanged from 0.72 (including the
origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective
rate also increased from the previous week.
For jumbo loan balances, the average contract interest rate
for 30-year fixed-rate mortgages (greater than $726,200) increased to 7.32
percent from 7.25 percent, with points increasing to 0.80 from 0.72 (including
the origination fee) for 80 percent LTV loans. The effective rate increased
from last week.
For mortgages backed by the FHA, the average 30-year
fixed-rate rose to to 7.08 percent from 7.04 percent, with points decreasing to
0.92 from 0.98 (including the origination fee) for 80 percent LTV loans. The
effective rate increased from last week.
For 15-year fixed-rate mortgages, the average contract
interest rate dropped to 6.62 percent from 6.72 percent, with points increasing
to 1.08 from 1.01 (including the origination fee) for 80 percent LTV loans. The
effective rate decreased from last week.
Lastly, the average contract interest rate for 5/1 ARMs dropped
to 6.42 percent from 6.59 percent, with points decreasing to 1.10 from 1.16
(including the origination fee) for 80 percent LTV loans. The effective rate declined
from the week prior.