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Mortgage Applications Drop 5.8%

Mortgage & Finance

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Mortgage applications fell 5.8% on a seasonally-adjusted basis from one week earlier for the week ending December 14th, 2018, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
On an unadjusted basis, the Market Composite Index, a measure of mortgage loan application volume, fell by 7% from the previous week. The Refinance Index fell 2% over the same period. The seasonally-adjusted Purchase Index fell 7% from the previous week, while the unadjusted Purchase Index fell 10%.
“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” says Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications decreased almost seven percent over the week and refinances decreased around two percent, led by a larger decline in government refinances compared to conventional refinances.”
The refinance share of mortgage activity rose to its highest level since February 2018 at 43.5% of total applications, up from 41.5% the previous week. The adjustable-rate mortgage (ARM) share of applications rose to 7.9%. The FHA share fell to 10.4% from 10.8%, the VA share fell to 9.9% from 10.2%, and the USDA share fell to 0.6% from 0.7%.
“With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action,” Kan adds. “The average loan balance for refinance loans increased to its highest level since September 2017.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) fell to its lowest level since September 2018 at 4.94%, down from 4.96% the previous week. Points for 80% loan-to-value ratio (LTV) loans fell to 0.43 from 0.48. (All 80% LTV loan reports include the origination fee.) The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) also fell to its lowest level since September at 4.74%, down from 4.80% the previous week. Points for 80% LTV loans fell to 0.26 from 0.33, and the effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA also fell to its lowest level since September at 4.95%, down from 4.97%. Points for 80% LTV loans fell to 0.51 from 0.55, and the effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since September at 4.37%, down from 4.41% the previous week. Points for 80% LTV loans fell to 0.37 from 0.44, and the effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs fell to its lowest level since September at 4.17%, down from 4.24%. Points for 80% LTV loans rose to 0.42 from 0.34, and the effective rate decreased from last week.

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