A cooling in demand for mortgage thanks to the rise in interest rates last week, led mortgage loan applications to decrease this week. According to MBA's weekly Mortgage Application Survey, mortgage applications decreased 2.7 percent from the earlier week on a seasonally adjusted basis.
On an unadjusted basis, mortgage applications declined 0.3 percent the survey indicated. The refinance index saw a decline of 5 percent from the previous week while the seasonally adjusted purchase index decreased 2 percent from the earlier week. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 13 percent higher than the same week a year ago.
Looking at the share of mortgage activity, the survey noted that refinance activity decreased to 44.5 percent of the total applications while the adjustable-rate mortgage (ARM) share decreased to 8.3 percent of total applications.
"Both purchase and refinance applications saw declines but remained at healthy levels, with the purchase index remaining close to a nine-year high, and the refinance index hovering near its highest level since last spring," said Joel Kan, AVP of Economic and Industry Forecasting at MBA.
Breaking down the share of loan applications for government loans, the survey found that the FHA share of total applications decreased slightly to 10.5 percent from 10.9 percent in the prior week. The VA share of applications decreased to 10.3 percent from 10.4 percent, while the USDA share of total applications also saw a slight dip from 0.5 percent to 0.4 percent.
Here's a break down of the average contract interest rates for various loan types:
- For 30-year fixed-rate mortgages with conforming loan balances rates increased to 4.75 percent from 4.74 percent. The effective rate remained unchanged from last week.
- The rate for 30-year fixed-rate mortgages with jumbo loan balances increased to 4.59 percent from 4.53 percent. The effective rate decreased from last week.
- For FHA-backed 30-year fixed-rate mortgages, the rate increased to 4.82 percent from 4.76 percent. The effective rate increased from last week.
- The interest rate for 15-year fixed-rate mortgages decreased to 4.12 percent from 4.13 percent. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs increased to 4.12 percent from 4.08 percent. The effective rate increased from last week.