Global| Feb 19 2020U.S. Mortgage Applications Retreat
by:Sandy Batten
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 6.4% w/w in the week ending on February 14. This was the first decline in four weeks. Compared to a year ago, applications were up 76.7%. Purchase [...]
The Mortgage Bankers Association reported that its Mortgage Loan Application Index fell 6.4% w/w in the week ending on February 14. This was the first decline in four weeks. Compared to a year ago, applications were up 76.7%. Purchase applications declined 3.4% w/w (+11.0% y/y), the third consecutive weekly decline. Applications to refinance a loan decreased 8.0% w/w (+165.1% y/y), also their first decline in four weeks.
Mortgage interest rates generally rose in the week ending February 14 but remained well below their most recent peaks. The effective interest rate on a 15-year fixed rate mortgage rose to 3.29% from 3.26% the previous week. This is the second consecutive weekly increase but leaves the rate well below its most recent peak of 4.71% reached in early November 2018. The effective interest rate on the 30-year fixed rate mortgage also rose, to 3.85%, its first increase in eight weeks, from 3.80% the previous week. The effective rate on the 30-year Jumbo mortgage rose to 3.84% from 3.79%. The interest rate on the 5-year adjustable rate mortgage increased to 3.30% from 3.25%.
Led by a big drop in the average loan size for refinancing, the average mortgage loan size fell to $334,200 in the week ending February 14 from $347,100 the previous week. The average loan size for purchases was little changed at $346,800 versus $347,300 the previous week while the average loan size for refinancings fell sharply to $326,800 from $347,000.
Applications for fixed-rate loans fell 5.6% w/w (+81.1% y/y), and applications for adjustable rate loans collapsed 18.9% w/w (+23.8% 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 each index 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) | 02/14/20 | 02/07/20 | 01/31/20 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -6.4 | 1.1 | 5.0 | 76.7 | 32.4 | -10.4 | -17.8 |
| Purchase | -3.4 | -5.8 | -9.5 | 11.0 | 6.6 | 2.1 | 5.6 |
| Refinancing | -8.0 | 5.0 | 15.3 | 165.1 | 71.1 | -24.3 | -34.0 |
| 15-Year Effective Mortgage Interest Rate (%) | 3.29 | 3.26 | 3.25 | 4.16 (Feb.'19) | 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.
