Global| Aug 12 2020Mortgage Applications Rebound with Record Low Rates
by:Sandy Batten
|in:Economy in Brief
Summary
• Mortgage applications rose 6.8% in week ending August 7. • A 9.1% increase in refinance applications led the increase. Purchase applications were up 2.0%. • Major mortgage interest rates fell to new lows for the history of the [...]
• Mortgage applications rose 6.8% in week ending August 7.
• A 9.1% increase in refinance applications led the increase. Purchase applications were up 2.0%.
• Major mortgage interest rates fell to new lows for the history of the survey (January 1990).
The Mortgage Bankers Association reported that its total Mortgage Applications Index increased 6.8% w/w (+37.1% y/y) in the week ended August 7 after having declined in each of the previous two weeks. Applications for loans to purchase a home rose 2.0% w/w (+21.8% y/y) following a 1.8% w/w decline the previous week. Loan applications for refinancing jumped up 9.1% w/w (+46.7% y/y) after having fallen 6.8% w/w the previous week. The refinance share of mortgage activity increased to 65.7% of total applications, the highest since May, from 63.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.7% of total applications.
All three major mortgage interest rates fell last week to new lows for the series, which dates back to January 1990. The effective interest rate on a 15-year fixed-rate mortgage declined to 2.76% from 2.83% the previous week. The 30-year fixed rate fell to 3.16% from 3.25% the previous week. The 30-year jumbo rate slumped 12 basis points to 3.49%. In contrast, the 5-year adjustable rate increased to 3.11% from 3.07% the previous week.
The average mortgage loan size was unchanged at $326,300 (-5.5% y/y), down meaningfully from the early March high of $367,900. For purchases the average loan size slipped to $364,300 (+12.6% y/y) from $366,500 while the average refinancing loan edged up to $306,500 (-14.6% y/y) from $303,700.
With fixed mortgage interest rates having fallen more than adjustable rates, applications for fixed-rate loans were up 41.9% y/y while applications for adjustable rate mortgages were down 38.6% y/y.
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.
| MBA Mortgage Applications (%, SA) | 08/07/20 | 07/31/20 | 07/24/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 6.8 | -5.1 | -0.8 | 37.1 | 32.4 | -10.4 | -17.8 |
| Purchase | 2.0 | -1.8 | -1.5 | 21.8 | 6.6 | 2.1 | 5.6 |
| Refinancing | 9.1 | -6.8 | -0.4 | 46.7 | 71.1 | -24.3 | -34.0 |
| 15-Year Effective Mortgage Interest Rate (%) | 2.76 | 2.83 | 2.85 |
3.40 |
3.71 | 4.35 | 3.59 |
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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