U.S. Mortgage Applications Dip in Late December

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending December 28, 2018, U.S. mortgage applications decreased 9.8 percent from two weeks earlier. The results include adjustments to account for the Christmas holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 9.8 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 46 percent compared with two weeks ago.

The Refinance Index decreased 12 percent from two weeks ago. The seasonally adjusted Purchase Index decreased 8 percent from two weeks earlier. The unadjusted Purchase Index decreased 46 percent compared with two weeks ago and was 6 percent lower than the same week one year ago.

"Mortgage applications fell over the past two weeks - even as the 30-year fixed-rate mortgage decreased to 4.84 percent, its lowest since September 2018. Investors continued to show a preference for safer U.S. Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped. Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA application processing times likely contributed to the weakness in activity."

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The refinance share of mortgage activity decreased to 42.7 percent of total applications from 43.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.6 percent of total applications.

The FHA share of total applications increased to 10.0 percent from 9.7 percent the week prior. The VA share of total applications increased to 11.0 percent from 10.1 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.84 percent from 4.86 percent, with points decreasing to 0.42 from 0.47 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.72 percent from 4.59 percent, with points increasing to 0.30 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.86 percent from 4.91 percent, with points decreasing to 0.54 from 0.57 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.25 percent from 4.31 percent, with points increasing to 0.60 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 4.16 percent from 4.23 percent, with points decreasing to 0.34 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.