U.S. Mortgage Applications Decline as Interest Rates Rise Last Week
by:Tom Moeller
|in:Economy in Brief
Summary
- Drop in mortgage applications follows three weekly increases.
- Purchase & refinancing applications both decline.
- Effective interest rates move higher.
Mortgage applications fell 5.7% (-3.6% y/y) in the week ended May 24, following three consecutive weeks of increase. The latest level of applications was the lowest since the first week of March. Home purchase loans declined 1.1% (-10.4% y/y) after falling 1.2% one week earlier. Applications to refinance a loan weakened 13.6% (+12.4% y/y) in the latest week after rising for three straight weeks. These data came from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
The effective interest rate on a 30-year fixed-rate loan rose to 7.24% in the week ended May 24, from 7.18% in the prior week. It compared to a high of 8.12% in mid-October of last year and a low of 6.87% in the fourth week of December. The rate on 15-year fixed-rate mortgages increased to 6.83% last week from 6.55% in the week prior. The rate on 30-year Jumbo loans edged higher to 7.34% last week from 7.30% in the week prior, and the rate on the 5-year ARM increased to 6.92% in the latest week from 6.69% the week prior. These latter rates remain below the 7.31% high in the last week of October but above the recent low of 5.93% in the last week of December.
The share of applications for refinancing an existing loan fell to 31.3% in the week ended May 24 from 34.0% in the week ended May 17. That compared to a high of 39.7% in mid-December. The percentage of applications which were ARMs eased to 6.4% from 6.6%. The recent low of 5.4% was reached in early January.
The average loan size fell 0.7% (-2.5% y/y) to $381,400 in the week ended May 24, after rising to $383,900 in the prior week. The average size of a purchase loan fell 1.5% (-0.5% y/y) to $437,200 last week from $440,000 in the prior week. The average loan size to refinance a mortgage dropped 3.0% (+0.2% y/y) to $258,900 from $267,000 in the prior week.
The Mortgage Bankers Association Survey covers 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 SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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