Mortgage loan applications submitted during the week ended February 14 declined for the first time since mid-January. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, decreased 6.4 percent on a seasonally adjusted basis compared to the week ended February 7. On an unadjusted basis, the Index lost 5 percent.
The Refinance Index also fell for the first time in for weeks, decreasing 8 percent from the previous week. However, it was still 165 percent higher than the same week one year ago. Refinancing applications accounted for 63.2 percent of total applications, down from 65.5 percent a week earlier.
The seasonally adjusted Purchase Index decreased 3 percent but was up 2 percent on an unadjusted basis. Applications were 10 percent higher than the same week one year ago.
Refi Index vs 30yr Fixed
Purchase Index vs 30yr Fixed
"Treasury yields moved slightly higher last week, despite uncertainty surrounding the economic impact from the spread of the coronavirus. The 30-year fixed mortgage increased five basis points to 3.77 percent as a result, causing refinance applications - driven by a 11 percent drop in applications for conventional refinances - to fall," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with an 8 percent decline, the refinance index was still at its third highest reading so far this year. Government refinance activity, which tends to lag movements in the conventional market, bucked the overall trend, as VA loan refinances jumped 23 percent."
Added Kan, "Purchase applications fell 3 percent last week, as there continues to be some pullback after a strong January. Activity was still 10 percent higher than a year ago, but too few options - especially at the lower portion of the market - are slowing some would-be buyers."
The size of mortgage loans also declined from the previous week. Overall loan size was $334,200, down from $347,100 and purchase loans averaged $346,800 compared to $347,300.
The FHA share of total applications decreased to 9.5 percent from 9.7 percent the prior week and the VA share of total applications rose to 12.1 percent from 10.1 percent. The USDA share of total applications remained unchanged from 0.4 percent the week prior.
Both contract and effective rates moved higher for all loan products during the week. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $510,400 increased to 3.77 percent from 3.72 percent. Points were unchanged at 0.28.
The rate for jumbo 30-year FRM, loans with origination balances exceeding the conforming limit, increased 4 basis points to 3.79 percent. Points rose to 0.19 from 0.17.
The average contract interest rate for 30-year FRM backed by the FHA increased to 3.86 percent from 3.84 percent, with points decreasing to 0.24 from 0.26.
Fifteen-year FRM had a contract rate that averaged 3.22 percent, up from 3.20 percent the prior week. Points dipped to 0.26 from 0.27.
The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.23 percent from 3.21 percent, with points increasing to 0.21 from 0.13. The ARM share of activity decreased to 5.4 percent of total applications from 6.2 percent the previous week.
MBA's Weekly Mortgage Applications Survey been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.