U.S. Mortgage Loan Applications Increase as Interest Rates Decline

The Mortgage Bankers Association reported that its total Mortgage Applications Index rose 5.3% (46.5% y/y) during the week ending August 2 following five consecutive weeks of decline. Applications to refinance a loan firmed 11.8% and more-than doubled y/y, up 115.9%. Purchase applications were off 2.0% (+6.5% y/y), the fourth consecutive weekly decline.

The effective interest rate, which includes points, on a 15-year fixed-rate mortgage fell w/w to 3.47% from 3.55%. That compared to a high of 4.71% early in November 2018. The effective rate on a 30-year fixed-rate loan eased w/w to 4.11%, remaining below the November high of 5.33%. The effective rate on a 30-year Jumbo mortgage fell to 4.04%. It remained below the October peak of 5.09%. The rate on an adjustable 5-year mortgage dropped to 3.49%. It's recent high was 4.52% averaged last October.

The average mortgage loan size increased w/w to $321,600 (11.2% y/y), remaining below the record of $381,700 in late-March. For purchases, the average loan size fell to $318,300 (+3.3% y/y). The average loan size for refinancings increased to $324,500 (+22.9% y/y). These series date back to 1990.

Applications for fixed-rate loans rose by more than one-half y/y, while adjustable rate loan applications rose 10.5% 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)	8/2/2019	7/26/2019	7/19/2019	Y/Y	2018	2017	2016
Total Market Index	5.3	-1.4	-1.9	46.5	-10.4	-17.8	15.6
Purchase	-2.0	-3.0	-1.6	6.5	2.1	5.6	13.3
Refinancing	11.8	0.1	-2.1	115.9	-24.3	-34.0	17.3
15-Year Mortgage Effective Interest Rate (%)	3.47	3.55	3.50	4.37 (Aug '18)	4.35	3.59	3.22

 

 

U.S. Home Affordability Improves as Mortgage Rates Decline
by Tom Moeller  August 7, 2019

The National Association of Realtors reported that its Fixed Rate Mortgage Housing Affordability Index improved 1.3% to 151.9 during June (10.3% y/y) after falling 1.6% in May. Despite the increase, affordability remained 28.8% below the peak level during January 2013.

The affordability increase occurred in June as principal & interest payments eased m/m to 16.5% of median income from 16.7% in May. The percentage remained below its 18.2% peak in June 2018, but above the low of 11.6% in January 2013. Payments were pulled lower as the average mortgage interest rate declined to 3.84% in June from 4.11% in May and was sharply below December's high of 4.99%. Monthly principal & interest payments fell slightly to $1,082 per month. The median sales price of an existing home rose 4.5% y/y to $288,900. Growth in median family income picked up to 3.5% y/y in June from 3.4% during all of last year.

The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter the home-buying market. Data on Home Affordability can be found in Haver's REALTOR database. Interest rate data can be found in the WEEKLY and DAILY databases.

Housing Affordability	Jun	May	Apr	Jun Y/Y	2018	2017	2016
Fixed Rate Housing Affordability Index	151.9	150.0	152.5	10.3%	147.8	159.1	167.7
Payment as a Percent of Income	16.5	16.7	16.4	18.2	17.0	15.7	14.9
Principal and Interest Payment	$1,082	$1,087	$1,065	-6.2%	$1,079	$967	$880
Median Sales Price (Existing Single Family Home)	$288,900	$280,900	$269,100	4.5%	$259,458	$247,508	$233,642
Monthly Fixed Mortgage Rate	3.84%	4.11%	4.30%	4.74%	4.72%	4.20%	3.88%
Median Family Income	$78,916	$78,238	$77,944	3.5%	$76,396	$73,891	$71,062

 

U.S. Consumer Credit Usage Eases
by Tom Moeller  August 7, 2019

Individuals pared back their borrowing needs in June, but it remains strong. Consumer credit outstanding increased $14.58 billion (5.1% y/y) after rising $17.81 billion in May, revised from $17.71 billion. It was the smallest increase in three months. A $16.5 billion gain had been expected by the Action Economics Forecast Survey.

Nonrevolving credit usage grew $14.68 billion (5.6% y/y) during June, the strongest increase in six months. Borrowing from the federal government, which issues over 40% of nonrevolving credit, rose 7.3% y/y. Depository institutions lending (25% of credit) gained an accelerated 6.1% y/y. Meanwhile, finance company balances edged 0.7% higher y/y and credit union loans strengthened 8.7% y/y. Each of these sectors provide roughly 15% of nonrevolving credit.

Revolving consumer credit balances eased $0.08 billion (+3.9% y/y) in June following two months of strong increase. Credit provided by depository institutions, which makes up 90% of revolving balances, grew 4.9% y/y. Borrowing from credit unions (6% of the issuance) increased 8.4% y/y.

These Federal Reserve Board figures are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of the Census and Survey of Finance Companies, as well as changes in the seasonal adjustment methodology.

The consumer credit data are available in Haver's USECON database. The Action Economics figures are contained in the AS1REPNA database.

Consumer Credit Outstanding (M/M Chg, SA)	Jun	May	Apr	Jun y/y	2018	2017	2016
Total	$14.58 bil.	$17.81 bil.	$17.50 bil.	5.1%	4.7%	5.0%	6.8%
Nonrevolving	14.68	10.32	10.81	5.6	5.3	4.8	6.9
Revolving	-0.08	7.48	6.68	3.9	3.1	5.6	6.8