Spring has arrived, but the typically related boost to the housing market has not.
Mortgage application volume decreased from a week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ended March 31. The decrease followed four consecutive weeks of increases.
The Market Composite Index — a measure of overall mortgage loan application volume — decreased 4.1% on a seasonally adjusted basis from a week earlier, the MBA said. On an unadjusted basis, the index decreased 4% from the previous week.
The Refinance Index decreased 5% from the previous week, and it was 59% lower than the same week last year.
The seasonally adjusted Purchase Index decreased 4% from a week earlier. Unadjusted, it decreased 3% from the previous week and was 35% lower than the same week last year.
“Spring has arrived, but the housing market is missing the customary burst in listings and purchase activity that typically mark the season,” said Mike Fratantoni, MBA’s SVP and chief economist. “After four weeks of increasing purchase application activity, volume declined a bit this week even with another small drop in mortgage rates.
Refi Volume Remains Low
Fratantoni noted that refinance application volume continues to be low. “Although the mortgage rate for conforming balance loans declined by five basis points over the week to 6.4%, the mortgage rate for jumbo loans increased by nine basis points to 6.36%. While we have seen relative weakness at the high end of the housing market in recent months, the divergence in rates suggests that banks may be tightening credit in response to recent challenges, preserving balance sheet capacity as deposit balances have declined. In recent years, most jumbo loans have been kept on depository balance sheets.”
The refinance share of mortgage activity decreased to 28.6% of total applications from 29.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.2% of total applications.
He added that, “At the entry-level segment of the market, purchase applications for both FHA and VA loans decreased last week. We do expect strong demand from first-time homebuyers over the next several years given the large number of millennials hitting peak first-time homebuyer age, but affordability remains a real challenge in this environment.”
The FHA share of total applications decreased to 12% from 12.3% the previous week. The VA share of total applications decreased to 11% from 11.6% the previous week. The USDA share of total applications increased to 0.6% from 0.5% a week earlier.
Mortgage rates
Note: The points listed include the origination fee and are for 80% loan-to-value (LTV) ratio loans.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.4% from 6.45%, with points decreasing to 0.59 from 0.62. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.36% from 6.27%, with points decreasing to 0.47 from 0.54. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 6.33%, with points decreasing to 0.92 from 0.93. The effective rate remained unchanged from last week.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 5.97% from 5.84%, with points decreasing to 0.54 from 0.57. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 5.61% from 5.62%, with points increasing to 1.02 from 0.91. The effective rate increased from last week.
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. Base period and value for all indexes is March 16, 1990=100.
