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Economy in Brief

U.S. Mortgage Applications Continue to Strengthen With Lower Interest Rates
by Tom Moeller  February 5, 2020

The Mortgage Bankers Association reported that its Mortgage Loan Index increased 5.0% during the week of January 31 and built on a 7.2% gain in the prior week. Applications to refinance a loan jumped 15.3% (182.5% y/y) and built on the prior week's 7.5% rise. Purchase applications weakened 9.5% (+12.1% y/y) after a 5.3% increase.

The contract interest rate on a 30-year fixed-rate mortgage fell last week to 3.71% from 3.81%, and remained the lowest reading since November 2016. This rate is below its high of 5.17% reached early in November 2018. The contract rate on a 15-year fixed-rate loan declined to 3.19% from 3.24%. The contract rate on a 30-year Jumbo mortgage fell to 3.70% from 3.78%. The interest rate on an adjustable rate mortgage rose to 3.23%, but remained near the lowest level since September 2017.

The average mortgage loan size surged to $342,400 (8.9% y/y). The average loan size for purchases edged higher to $341,400 (6.5% y/y). The average loan size for refinancings jumped to $343,000 (12.1% y/y).

Applications for fixed-rate loans surged by more than three-quarters y/y while applications for adjustable rate loans gained by just over one-third y/y.

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for each index is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (%, SA) 01/31/20 01/24/20 01/17/20 Y/Y 2019 2018 2017
Total Market Index 5.0 7.2 -1.2 80.0 32.4 -10.4 -17.8
  Purchase -9.5 5.3 -2.0 12.1 6.6 2.1 5.6
  Refinancing 15.3 7.5 -1.8 182.5 71.1 -24.3 -34.0
30-Year Mortgage Contract Interest Rate (%) 3.71 3.81 3.87 4.75 (Jan'19) 4.22 4.80 4.21
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