Global| Aug 19 2020Mortgage Loan Applications Decline as Interest Rates Increase
by:Tom Moeller
|in:Economy in Brief
Summary
• Mortgage demand wavers. • Applications to refinance an existing loan decline while purchase applications rise. The Mortgage Bankers Association reported that its total Mortgage Applications Index fell 3.3% (+34.3% y/y) during the [...]
• Mortgage demand wavers.
• Applications to refinance an existing loan decline while purchase applications rise.
The Mortgage Bankers Association reported that its total Mortgage Applications Index fell 3.3% (+34.3% y/y) during the week ended August 14 and reversed half of the prior week's increase. A 5.3% decline (+38.3% y/y) in applications to refinance an existing loan accounted for the fall as it followed the prior week's 9.1% increase. Home purchase applications edged 0.8% higher (26.7% y/y) following a 2.0% increase in the previous week.
The pull-back in loan demand occurred as interest rates increased last week. The effective interest rate on a 30-year fixed-rate mortgage rose to 3.23% and reversed the prior week's decline to 3.16%. The 15-year fixed rate rose to 2.82% and also reversed the prior week's decline. The 30-year jumbo rate edged higher to 3.52%. Holding steady was the 5-year adjustable rate at 3.11%.
The average mortgage loan size was little changed w/w at $326,800 (-5.2% y/y), down sharply from the early-March high of $367,900. For purchases, the average loan size rose to $367,800 (13.7% y/y) from $364,300. The average refinancing loan size eased to $304,300 (-14.9% y/y) from $306,500.
Applications for fixed-rate loans rose 39.5% y/y while applications for adjustable rate mortgages declined 43.3% 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 all indexes 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) | 08/14/20 | 08/07/20 | 07/31/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -3.3 | 6.8 | -5.1 | 34.2 | 32.4 | -10.4 | -17.8 |
| Purchase | 0.8 | 2.0 | -1.8 | 26.7 | 6.6 | 2.1 | 5.6 |
| Refinancing | -5.3 | 9.1 | -6.8 | 38.3 | 71.1 | -24.3 | -34.0 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.23 | 3.16 | 3.25 |
4.03 |
4.34 | 4.94 | 4.32 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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