Slowing U.S. Mortgage Refinancings Drive Down Loan Application Volumes

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Despite record-low U.S. mortgage rates, the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 29 reports mortgage applications decreased 6.7 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 6.6 percent compared with the previous week.

The Refinance Index was down about 8 percent overall this week, largely driven by a significant drop in refinance applications for government loans. The HARP 2.0 share of refinance applications has been 24 percent over the past two weeks, up slightly from 20 percent three weeks ago.  

The seasonally adjusted Purchase Index increased less than 1 percent from one week earlier. The unadjusted Purchase Index increased slightly but was relatively flat compared with the previous week and was 7 percent lower than the same week one year ago.

The refinance share of mortgage activity decreased to 78 percent of total applications from more than 79 percent the previous week.  This is the lowest refinance share since June 1, 2012. The adjustable-rate mortgage (ARM) share of activity is more than 4 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.86 percent from 3.88 percent, with points increasing to 0.41 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  This is the lowest 30-year fixed rate since MBA began tracking the series.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.08 percent from 4.12 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent LTV loans.  This is the second lowest 30-year jumbo rate since MBA began tracking the series.    The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.69 percent from 3.71 percent, with points increasing to 0.50 from 0.46 (including the origination fee) for 80 percent LTV loans.  This is the lowest FHA rate since MBA began tracking the series.    The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent from 3.24 percent, with points increasing to 0.47 from 0.44 (including the origination fee) for 80 percent LTV loans.  This is the lowest 15-year fixed rate since MBA began tracking the series.  The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.76 percent from 2.81 percent, with points increasing to 0.45 from 0.41 (including the origination fee) for 80 percent LTV loans.  This is the lowest 5/1 ARM rate since June 15, 2012.  The effective rate decreased from last week.