U.S. Mortgage Applications Dip in Late July

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According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending July 24, 2020, U.S. mortgage applications decreased 0.8 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.8 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 decreased 0.4 percent from the previous week and was 121 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 1 percent compared with the previous week and was 21 percent higher than the same week one year ago.

"Mortgage rates remained near record lows for conventional loans last week, and refinances in the conventional sector continued to slightly increase. However, rates on FHA loans rose, leading to an almost 18 percent drop in FHA refinances," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Homebuyers stepped back slightly, and there was a larger drop in purchase application volume for FHA, VA, and USDA loans. This trend, along with the fact that average loan sizes are increasing, indicate that prospective first-time buyers are being impacted more by the rising economic stress caused by the resurgence in COVID-19 cases, as well as the uncertainty on how the next round of government support will take shape."

The refinance share of mortgage activity increased to 65.1 percent of total applications from 64.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.2 percent of total applications.

The FHA share of total applications decreased to 9.6 percent from 10.8 percent the week prior. The VA share of total applications increased to 11.2 percent from 10.8 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) remained unchanged at 3.20 percent, with points increasing to 0.37 from 0.35 (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 3.52 percent from 3.51 percent, with points increasing to 0.30 from 0.29 (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 increased to 3.27 percent from 3.13 percent, with points increasing to 0.35 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.76 percent from 2.71 percent, with points increasing to 0.36 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 5/1 ARMs increased to 3.08 percent from 2.89 percent, with points decreasing to 0.11 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.