U.S. Mortgage Applications Declined in Latest Week
Summary
- Purchase applications dropped while loan refinancing edged up.
- Fixed-interest rate on 30-year loan holds at a 4-month low.
- Average loan size edged up.
Mortgage applications declined by 1.2% (+18.2% y/y) in the week ending August 29, after easing 0.5% (+21.6% y/y) in the week ending August 22, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans dropped 3.1% (+16.6% y/y) last week, following a gain of 2.2% (24.3% y/y) in the prior week. Applications to refinance a home loan edged up 0.9% (20.1% y/y) last week, after declining 3.5% (+18.6% y/y) in the week of August 22.
The effective interest rate on a 30-year fixed-rate loan edged down 5bps to 6.81% in the week ending August 29 from 6.86% in the week ending August 22. It had been at 6.86% for three consecutive weeks. The recent high of 7.28% was reached in the second week of January. The rate on 15-year fixed-rate mortgages declined by 18bps to 6.04% in the latest week from 6.22% in the prior week. The rate on 30-year Jumbo loans dropped 11bps to 6.69% in the week ending August 29 from 6.80% one week earlier. The rate on a 5-year ARM fell 16bps to 6.03% in the latest week from 6.19% in the week of August 22.
The share of applications for refinancing an existing loan rose to 46.9% of total applications in the week ending August 29 after easing to 45.3% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity rose to 8.80% in the latest week from 8.40% in the week of August 22.
The average size of a mortgage loan rose 0.5% (1.8% y/y) to $384,800 in the week ending August 29, after falling 1.2% (+2.9% y/y) to $383,000 in the week of August 22. The average size of a purchase loan fell 1.6% (-0.2% y/y) to $426,400 in the latest week after rising 1.0% (1.5% y/y) to $433,400 in the prior week. The average size of a loan to refinance a mortgage rose 4.8% (5.1% y/y) to $337,700 in the week ending August 29 after falling 5.2% (+4.2% y/y) to $322,200 in the prior week. It was increased from a low of $277,900 in the last week of May.
The Mortgage Bankers Association Survey covers 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 SURVEYS database.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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