Mortgage Applications Volume Declines 9 Percent, MBA Says

Mortgage ApplicationsJust one week after mortgage applications had ticked up by 1.3 percent, this metric took a rather significant 9 percent hit in the most recent Mortgage Bankers Association Weekly Mortgage Applications Survey released last week.

The Market Composite Index, or the combined index measuring purchase applications and refinance applications, tumbled 9 percent in the week ended February 6, 2015, with seasonality taken into account. Without adjustments for seasonality, the Market Composite Index lost 7 percent week-over-week.

The Refinance Index was also down, losing 10 percent from the last survey for the month of January. The Purchase Indices also lost a significant amount of momentum, slipping 7 percent with seasonality and 1 percent without seasonality. The unadjusted Purchase Index, however, ended the week 1 percent higher than it was one year ago.

The MBA’s purchase and refinance indexes have been on quite the roll to start 2015, and there was even one week this year where total mortgage applications had improved by a whopping 49 percent. But mortgage rates are seemingly making the move up once again, following a series of encouraging economic reports. This may have led to the sudden decline in mortgage applications in the MBA’s report, though as shown below, mortgage rates are still very close to their 20-month lows, and still below the crucial threshold of 4 percent for conforming 30-year fixed-rate mortgages.

In terms of the types of mortgages taken out, the refinance share of mortgage activity slipped from 71 percent the week prior to 69 percent as of February 6, 2015. Adjustable-rate mortgages, on the other hand, were up to a 5.7 percent share. Also increasing were Federal Housing Administration-backed loans, as their share went up from 13.1 percent in the previous week to 14.1 percent in the most recent week. Department of Veteran’s Affairs (VA) loans slipped a bit from 8.5 percent to 8.3 percent, while the share of United States Department of Agriculture loans improved slightly, edging from 0.6 percent to 0.7 percent.

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Talking about mortgage rates, the average interest rate for 30-year fixed-rate mortgage products with conforming loan balances ($417,000 or less) moved up five basis points from 3.79 percent to 3.84 percent, with points up from 0.29 to 0.31. This marked the highest interest rate for this type mortgage since the week ended January 9, 2015. 30-year jumbo mortgages ($417,001 or more) were also up, jumping eight basis points from 3.82 percent to 3.90 percent with points slipping from 0.22 to 0.19. 30-year FHA-backed mortgages also added a few basis points, advancing from 3.69 percent to 3.72 percent, with points up from 0.07 to 0.13.

The average interest rate for 15-year fixed-rate mortgages ticked up by a single hundredth of a percentage point from 3.14 percent to 3.15 percent, with points moving from 0.31 to 0.29. Lastly, 5/1 ARMs moved higher by four basis points from 3.03 percent to 3.07 percent, with points moving up from 0.39 to 0.44. All the above rates are for loans with an 80 percent loan-to-value ratio.