U.S. Mortgage Applications Decline as Interest Rates Steady
by:Tom Moeller
|in:Economy in Brief
Summary
- Applications fall after three weeks of increase.
- Purchase applications decline sharply but refinancing gains.
- Long-term interest rates remain at seven-month low.
Mortgage applications declined 7.2% (-13.1% y/y) in the week ended January 26 after rising 3.7% in the prior week and 10.4% in the second week of January. These data come from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a home fell 11.4% (-18.8% y/y) last week after rising 7.5% in the week earlier and 9.2% in this month’s second week. In contrast, applications to refinance a loan rose 1.6% (3.0% y/y) following a 7.0% decline.
The share of applications for refinancing an existing loan rose to 34.2% last week from 32.7% in the week ended January 19. The percentage of applications that were ARMs rose to 6.6% in the latest week from 6.3% in the prior week. It was the highest percentage since early-December.
The effective rate last week on a 30-year fixed-rate loan of 6.97% compared to 6.96% in the prior week. It has been near that level for seven weeks and below the 8.12% high in mid-October. The rate on 15-year fixed-rate mortgages also was steady at 6.47%. The rate on 30-year Jumbo loan was unchanged at 7.08% in the week ended January 26. The rate on the 5-year ARM was minimally higher at 6.45% in the latest week but was below the 7.31% high in the last week of October.
The average loan size rose 2.0% (3.8% y/y) to $384,800 in the fourth week of January after a rise to $377,100 in the prior week. The average size of a purchase loan rose 4.5% (7.0% y/y) to $444,100 last week after a 2.5% gain in the prior week. The average loan size to refinance a mortgage fell 2.8% (+3.4% y/y) to $270,700 after a 2.8% rise 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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