Global| Jan 15 2020U.S. Mortgage Applications Surge on Lower Rates
by:Sandy Batten
|in:Economy in Brief
Summary
The Mortgage Bankers Association reported that its Mortgage Loan Index jumped 30.2% w/w (49.0% y/y) in the week ending January 10 on top of a 13.5% w/w rise in the previous week. Applications to refinance a loan surged 42.7% w/w [...]
The Mortgage Bankers Association reported that its Mortgage Loan Index jumped 30.2% w/w (49.0% y/y) in the week ending January 10 on top of a 13.5% w/w rise in the previous week. Applications to refinance a loan surged 42.7% w/w (108.5% y/y), adding to the 24.6% w/w jump in the previous week. Purchase applications increased a solid 15.5% w/w (9.1% y/y) following a 3.0% w/w rise in the previous week.
The effective interest rate on a 15-year fixed-rate mortgage fell to 3.36%, the third consecutive weekly decline and the lowest reading since November 2016, from 3.42%. This rate has generally fallen from its recent high of 4.71% reached in early November 2018. The effective rate on a 30-year fixed-rate loan declined to 3.96% from 4.01%. The effective rate on a 30-year Jumbo mortgage fell to 3.90%, also the lowest since November 2016, from 3.93%. In contrast, the interest rate on an adjustable rate 5-year mortgage rose sharply to 3.39% from 3.26% the previous week.
The average mortgage loan size rebounded, rising to $316,100 (-3.7% y/y) after having slumped to $298,100 in the previous week. The average loan size for purchases jumped to $326,900 (+6.8% y/y), more than recovering its decline to $318,200 the previous week. For refinancings, the average loan size surged to $309,700 (-12.3% y/y) from $284,000.
Applications for fixed-rate loans surged 56.7% y/y while applications for adjustable rate loans declined 26.7% y/y in the week ended January 10.
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) | 01/10/20 | 01/03/20 | 12/27/19 | Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Total Market Index | 30.2 | 13.5 | -13.2 | 49.0 | 32.4 | -10.4 | -17.8 |
| Purchase | 15.5 | 3.0 | 2.2 | 9.1 | 6.6 | 2.1 | 5.6 |
| Refinancing | 42.7 | 24.6 | -26.0 | 108.5 | 71.1 | -24.3 | -34.0 |
| 15-Year Mortgage Effective Interest Rate (%) | 3.36 | 3.42 | 3.44 | 4.26 (Jan'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.
