Mortgage Applications Decreased 2.4% in One Week

WASHINGTON DC – The Mortgage Bankers Association’s weekly mortgage applications survey has reported that mortgage applications decreased 2.4% in one week, based on data from the week of August 23.

The Market Composite Index, which measures mortgage loan application volume, decreased 2.4% last week on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Market Composite Index decreased 3% compared to the previous week.

The data suggest that the Refinance Index decreased 4% from the previous week and was 2% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 16% lower than the same week one year ago.

“There was little change in mortgage rates last week, with the 30-year fixed remaining at 3.03%,” says Joel Kan, associate VP of economic and industry forecasting at MBA. “Despite low rates, refinance applications declined, with some borrowers still waiting for rates to drop even lower.”

Kan says, “Recent uncertainty around the economy and pandemic have kept rates low over the past month, which is why the refinance index has oscillated around these levels. Even with a slight increase, purchase activity hit its highest level since early July, as applications for conventional and government loans increased. Home purchase activity continues to be dominated by higher price tiers of the market, with the purchase average loan size now at $396,500, the highest average in five weeks.”

“According to FHFA, June’s year-over-year increase in home prices was 18.8%, while the second quarter saw a 17.4% increase overall,” says Kan. “Both measures set new records, as housing demand continued to outpace the inventory of homes for sale.”

MBA’s weekly mortgage applications survey additionally found that the refinance share of mortgage activity decreased to 66.8% of total applications, from 67.3% the previous week. The adjustable-rate mortgage share of activity increased to 3.2% of total applications.

The FHA share of total applications increased from 11% the week prior, to 11.2%. The VA share of total applications decreased from 10% the week prior, to 9.7%. The USDA share of total applications increased from 0.4% the week prior, to 0.5%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) remained unchanged at 3.03%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) remained unchanged at 3.13%. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased from 3.1% to 3.09%. The average contract interest rate for 15-year fixed-rate mortgages increased from 2.38% to 2.39%. The average contract interest rate for 5/1 ARMs increased from 2.68% to 2.8%.

MBA’s weekly mortgage applications survey covers more than 75% of all US retail residential mortgage applications. The survey’s respondents include mortgage bankers, commercial banks and thrifts.