U.S. Mortgage Applications Surge Last Week as Interest Rates Slip
by:Tom Moeller
|in:Economy in Brief
Summary
- Loan refinancing continues to strengthen as purchase applications rise slightly.
- Effective fixed-interest rate on 30-year loans falls to four-month low.
- Average loan size continues to increase.
Mortgage applications increased 10.9% (11.9% y/y) in the week ending August 8, after rising 3.1% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loan refinancing surged 23.0% (7.5% y/y) last week, following a 5.2% gain in the prior week. Applications for loans to purchase a home rose 1.4% (16.3% y/y) last week, following a 1.5% rise in the week of August 1.
The effective interest rate on a 30-year fixed-rate loan eased to 6.86% in the week ending August 8 after falling to 6.94% in the prior week. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages declined to 6.09% in the latest week from 6.19% in the week of August 1. Conversely, the rate on 30-year Jumbo loans increased to 6.86% last week from 6.82% one week earlier. The rate on a 5-year ARM dropped to 6.05% in the week of August 8 after falling to 6.25% in the prior week. It was the lowest rate since the second week of March.
The share of applications for refinancing an existing loan jumped to 46.5% of total applications in the week ending August 8, from 41.5% 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 9.60% in the latest week from 8.50% in the week of August 1.
The average size of a mortgage loan jumped 4.5% (-1.1% y/y) to $398,700 in the week of August 8, following a 1.9% rise in the prior week. The average size of a purchase loan fell 1.2%, little changed y/y, to $426,900 in the latest week after gaining 0.7% in the week ending August 1. The average size of a loan to refinance a mortgage surged 18.3% (-3.0% y/y) to $366,400 last week, after rising 5.2% in the prior week. It was increased from $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.
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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