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Economy in Brief

U.S. Mortgage Applications and Interest Rates Fall
by Sandy Batten  April 29, 2020

• Financing rates at or near record lows.

• The housing market is weak but may be seeing first signs of springtime revival.

The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 3.3% w/w (+72.2% y/y) in the week ended April 24 after a 0.3% w/w decline in the previous week. Applications for purchase rose for the second week, jumping 11.6% w/w (-20.2% y/y) as they recover from a nearly five-year low. The ten largest states each reported an increase in purchase applications, which could be the first signs that the spring homebuying season, delayed by the coronavirus pandemic, may be gradually reviving. Applications for refinancing fell 7.3% w/w (+217.6% y/y) following a 0.8% w/w decline in the previous week. Refinancing activity is receding from a 10-year high reached at the end of March. The refinancing share of mortgage activity decreased to 71.6% of total applications from 75.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.9% of total applications.

The effective interest rate on a 15-year fixed-rate mortgage fell to 3.05% in the week ended April 24 from 3.12% the previous week. The effective interest rate on the 30-year fixed-rate mortgage edged down to 3.53%, a record low for the series which dates back to 1990, from 3.54%. The effective rate on a 30-year Jumbo mortgage dropped to 3.81% from 3.91%. The rate on the 5-year adjustable rate mortgage rose to 3.29% from 3.23%.

The average mortgage loan size rose to $309,200 from $305,800. The average loan size of refinancings increased to $304,100 from $301,600. The average loan size for purchases rose to $321,900 from $318,500.

Home buyers and owners continue to lock in currently low levels of interest rates. Applications for fixed-rate loans increased 89.1% y/y, while applications for adjustable rate loans fell 15.9% 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) 04/24/20 04/17/20 04/10/20 Y/Y 2019 2018 2017
Total Market Index -3.3 -0.3 7.3 72.2 32.4 -10.4 -17.8
  Purchase 11.6 2.1 -1.8 -20.2 6.6 2.1 5.6
  Refinancing -7.3 -0.8 10.1 217.6 71.1 -24.3 -34.0
15-Year Effective Mortgage Interest Rate (%) 3.05 3.12 3.11 3.91 3.71 4.35 3.59
30-Year Effective Mortgage Interest Rate (%) 3.53 3.54 3.53 4.55 4.34 4.94 4.32
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