Global| Mar 25 2020U.S. Mortgage Applications Decline Sharply as Interest Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 29.4% (+78.6% y/y) during the week ending March 20 after an 8.4% decline in the prior week. The decline occurred as refinancings fell by roughly [...]
The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 29.4% (+78.6% y/y) during the week ending March 20 after an 8.4% decline in the prior week. The decline occurred as refinancings fell by roughly one-third (+195.4% y/y) after a 10.4% drop, and purchase applications weakened 14.6% (-11.3% y/y) following the prior week's 0.9% slip.
The effective interest rate on a 15-year fixed-rate mortgage rose sharply to 3.38% from 3.20% in the week ended March 13. It was the highest rate since early-January but remained well below the peak of 4.71% early in November 2018. The effective interest rate on the 30-year fixed-rate mortgage also rose to 3.93%, the highest rate since mid-January. The effective rate on a 30-year Jumbo mortgage increased to 3.95%, and the rate on the 5-year adjustable rate mortgage rose to 3.48%.
The average mortgage loan size fell to $337,000 last week (-2.8% y/y). The average loan size of refinancings declined to $337,500 (-6.9% y/y). The average loan size for purchases fell to $336,000 and was unchanged y/y.
Applications for fixed-rate loans were up a lessened 81.9% y/y, while applications for adjustable rate loans moved up 39.8% 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) | 03/20/20 | 03/13/20 | 03/06/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -29.4 | -8.4 | 55.4 | 78.6 | 32.4 | -10.4 | -17.8 |
| Purchase | -14.6 | -0.9 | 5.6 | -11.3 | 6.6 | 2.1 | 5.6 |
| Refinancing | -33.8 | -10.4 | 78.6 | 195.4 | 71.1 | -24.3 | -34.0 |
| 15-Year Effective Mortgage Interest Rate (%) | 3.38 | 3.20 | 2.97 | 4.07 | 3.71 | 4.35 | 3.59 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.93 | 3.85 | 3.55 | 4.67 | 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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