Mortgage Applications Decrease in U.S. in Mid October

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending October 16, 2020, U.S. Mortgage applications decreased 0.6 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week.

The Refinance Index increased 0.2 percent from the previous week and was 74 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 26 percent higher than the same week one year ago.

"Mortgage rates increased last week, with the 30-year fixed rate climbing 2 basis points to 3.02 percent - the highest since late September. Despite the uptick in rates, refinance activity held steady, with FHA refinance applications posting a 17.6 percent increase, helping to offset declines in the other loan types," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Homebuyer demand remains strong this fall, but purchase applications did decrease 2 percent, with both conventional and government purchase activity taking a step back. Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remained robust compared to a year ago, rising 26 percent and 74 percent, respectively."

The refinance share of mortgage activity increased to 66.1 percent of total applications from 65.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 1.9 percent of total applications.

The FHA share of total applications increased to 11.8 percent from 10.7 percent the week prior. The VA share of total applications decreased to 12.6 percent from 13.4 percent the week prior. The USDA share of total applications decreased to 0.5 percent 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) increased to 3.02 percent from 3.00 percent, with points increasing to 0.36 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.33 percent from 3.30 percent, with points decreasing to 0.30 from 0.35 (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 remained unchanged at 3.12 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 15-year fixed-rate mortgages increased to 2.61 percent from 2.59 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs increased to 2.86 percent from 2.63 percent, with points remaining unchanged at 0.58 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.