Despite Declining Mortgage Rates in U.S., Mortgage Applications Slow

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According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 29, 2016, U.S. mortgage applications decreased 3.5 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week.

The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier to the lowest level since February 2016 while the seasonally adjusted Government Purchase Index fell to the lowest level since November 2015. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 60.7 percent of total applications from 61.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.7 percent of total applications.

The FHA share of total applications decreased to 9.4 percent from 10.1 percent the week prior. The VA share of total applications increased to 12.1 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.67 percent from 3.69 percent, with points decreasing to 0.30 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 $417,000) decreased to 3.65 percent from 3.67 percent, with points decreasing to 0.24 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.54 percent from 3.56 percent, with points decreasing to 0.32 from 0.35 (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 2.93 percent from 2.94 percent, with points increasing to 0.36 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.90 percent from 2.96 percent, with points decreasing to 0.24 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.