After four straight weeks of declines, mortgage applications saw a modest increase of 3.6 percent on a seasonally adjusted basis for the week ending Feb. 15, 2019, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
MBA Associate Vice President of Industry Surveys and Forecasts Joel Kan noted that such results could be indicative of positive momentum going forward.
“Mortgage rates held steady on mixed economic news, as core inflation remained firm, while retail sales in December were much weaker than expected. However, overall application activity picked up over the week,” Kan said in a press release. “After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago – showing some promise as we edge closer to the spring homebuying season.”
On an unadjusted basis, the survey’s Market Composite Index indicated a 7 percent jump in application volume. To understand the value in adjusting for seasonal anomalies in relation to mortgage statistics, one need only to look back a few weeks to the survey’s results for the week ending Feb. 1 when the adjusted Index indicated a 2.5 percent decrease in application volume but the unadjusted Index showed a 12 percent increase in applications.
Looking again at the most recent survey results, the Refinance Index increased 6 percent from the previous week. The uptick occurred as the refinance share of mortgage activity saw a slight decline – to 41.7 percent of total applications from 41.8 percent the previous week.
The seasonally adjusted Purchase Index saw a 2 percent increase from the previous week, and a 7 percent uptick on an unadjusted basis, which put it 3 percent higher than the same week one year prior. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.7 percent of total applications.
“Most rates remained close to 10-month lows, which allowed some borrowers with an incentive to refinance to capitalize,” Kan added. “The 30-year fixed rate was essentially unchanged at 4.66 percent.”
The 4.66 percent average 30-year fixed rate contract interest rate on conforming loan balances ($484,350 or less) represents only a one basis point increase from the previous week, with points decreasing to 0.42 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The minimal changes in interest rate and points coincided with zero changes in the effective rate for such loans.
There was an jumped eight-basis-point jump in the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), which increased to 4.56 percent from 4.48 percent, with points decreasing to 0.23 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate increased as well.
The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration (FHA) increased seven basis points to 4.68 percent from 4.61 percent, with points increasing to 0.58 from 0.53 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The FHA share of total applications decreased to 10.2 percent from 11 percent the week prior. The share of total applications backed by the Veterans Administration (VA) dropped to 10.1 percent from 10.9 percent the week prior. The U.S. Department of Agriculture (USDA) share of total applications increased to 0.7 percent from 0.6 percent the week prior.
For 15-year fixed-rate mortgages, the average contract interest rate remained steady at 4.04 percent, according to the press release, with points decreasing to 0.44 from 0.48 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the week before.
The average contract interest rate for 5/1 ARMs increased to 4 percent from 3.97 percent, with points decreasing to 0.24 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased as well.