Mortgage Applications Dip in Late August

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending August 21st, U.S. mortgage applications decreased 6.5 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week.

The Refinance Index decreased 10 percent from the previous week and was 34 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 33 percent higher than the same week one year ago.

"Mortgage rates were mixed last week, but the rates for 30-year fixed mortgages and 15-year fixed mortgages declined. Despite the lower rates, conventional refinance applications fell 11 percent and government refinance applications fell 6 percent, which pushed the total refinance index to its lowest weekly level since July," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The home purchase market remains a bright spot for the overall economy. Purchase applications were essentially unchanged but were 33 percent higher than a year ago - the 14th straight week of year-over-year gains. Mortgage rates at record lows and households looking for more space are driving this summer's surge in demand."

The refinance share of mortgage activity decreased to 62.6 percent of total applications from 64.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.6 percent of total applications.

The FHA share of total applications increased to 10.5 percent from 10.3 percent the week prior. The VA share of total applications increased to 11.8 percent from 11.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.11 percent from 3.13 percent, with points increasing to 0.38 from 0.36 (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 $510,400) remained unchanged at 3.41 percent, with points remaining unchanged at 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged from 3.16 percent, with points increasing to 0.29 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.70 percent from 2.73 percent, with points increasing to 0.39 from 0.36 (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 increased to 3.14 percent from 2.95 percent, with points increasing to 0.42 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.