U.S. Mortgage Applications Continued to Decline

• The decline was the seventh in the past eight weeks.

• Applications for both purchases and refinancing fell.

• Interest rate on 30-year mortgage edged down; first decline in eight weeks.

The Mortgage Bankers Association Mortgage Loan Applications Index fell 2.2% w/w (-16.4% y/y) in the week ended March 26, the seventh decline in eight weeks, on top of a 2.5% w/w drop in the previous week. Applications for refinancing declined 2.5% w/w (-32.2% y/y) after a 5.1% weekly decline the previous week. Refinancing applications have fallen steadily from their most recent peak in late January. Applications to purchase a home decreased 1.5% w/w (+40.4% y/y), their first weekly decline in five weeks.

The refinance share of mortgage activity edged down to 60.6% from 60.9% of total applications. This share has declined relatively steadily from a recent peak of 74.8% in early January. By contrast, the adjustable rate mortgage (ARM) share of activity continued to rise, increasing to 3.4% last week and its highest level since last July.

Mortgage interest rates generally receded last week though they are still 35-50 basis points higher than at the beginning of this year. The effective interest rate on a 30-year mortgage slipped to 3.44% from 3.48% in the prior week, its first weekly decline in eight weeks but 48 basis points above the 2.96% rate at the beginning of the year. The effective 15-year rate edged down 2 basis points to of 2.80% versus 2.47% as the year began. The effective rate for a 30-year Jumbo mortgage fell 10 basis points to 3.43%. By contrast, the rate on a five-year ARM rose 5 basis points to 3.00%, its third consecutive weekly increase.

The average mortgage loan size fell 2.5% w/w to $324,800 in the week ended March 26. The average size of a purchase loan declined 1.9% w/w to $401,400. The average purchase loan has generally declined after reaching a record high of $418,000 in the third week of February. The average size of a refinanced loan fell 3.2% w/w to $275,000.

Applications for fixed-rate loans fell 2.4% w/w (-16.6% y/y) last week, their fourth consecutive weekly decline. Applications for adjustable-rate mortgages rose 5.6% w/w (-10.0% y/y) last week on top of a 12.4% w/w jump in the prior week.

This 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.