Global| Sep 16 2020Mortgage Loan Applications Decline Even as Rates Fall to Record Lows
by:Sandy Batten
|in:Economy in Brief
Summary
• Applications for both purchase and refinancings declined. • Mortgage rates edged down to record lows. The Mortgage Bankers Association Mortgage Loan Applications Index decreased 2.5% w/w (+33.0% y/y) in the week ended September 11, [...]
• Applications for both purchase and refinancings declined.
• Mortgage rates edged down to record lows.
The Mortgage Bankers Association Mortgage Loan Applications Index decreased 2.5% w/w (+33.0% y/y) in the week ended September 11, the fourth weekly decline in the past five weeks. Applications had risen 2.9% w/w in the previous week. Applications for purchase loans slipped 0.5% w/w (+17.2% y/y) last week after having increased 2.6% w/w in the previous week. Refinancing applications slumped 3.7% w/w (+44.6% y/y), more than reversing the 3.0% w/w rise in the previous week. The refinance share of mortgage activity decreased to 62.8% of total applications from 63.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.3% of total applications.
The 30-year fixed rate interest rate eased one basis point to 3.16%, returning to its record low reached in the week of August 7. The rate on 15-year loans fell one basis point to another record low of 2.70%. The effective rate for a Jumbo mortgage loan fell (again by one basis point) to 3.48%, also a record low for this series which began in 2011. The rate on the 5-year adjustable rate mortgage jumped up to 3.41%, the highest rate since April 10, from 3.20% the previous week
The average mortgage loan size rose 0.7% w/w to $325,500. The average size of a purchase loan increased 0.4% to $370,200, a record high for this survey, and the average loan size to refinance gained 0.8% to $299,000.
Applications for fixed-rate loans fell 2.5% w/w (+36.8% y/y) and applications for adjustable rate mortgages declined 0.9% w/w (-39.7% 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) | 09/11/20 | 09/04/20 | 08/28/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -2.5 | 2.9 | -2.0 | 33.0 | 32.4 | -10.4 | -17.8 |
| Purchase | -0.5 | 2.6 | -0.2 | 17.2 | 6.6 | 2.1 | 5.6 |
| Refinancing | -3.7 | 3.0 | -3.1 | 44.6 | 71.1 | -24.3 | -34.0 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.16 | 3.17 | 3.19 | 4.08 (Sep '19) |
4.34 | 4.94 | 4.32 |
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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