U.S. Mortgage Applications Increase as Interest Rates Decline
by:Tom Moeller
|in:Economy in Brief
Summary
- Purchase applications decline while loan refinancing increases.
- Effective interest rates reverse prior week’s increase.
- Average loan size declines.
Mortgage applications rose 1.1% (-25.0% y/y) in the week ending July 14 after a 0.9% increase during the prior week, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The latest w/w rise was the fifth in six weeks.
Applications for purchase loans fell 1.3% (-21.5% y/y) in the latest week following a 1.8% rise in the previous week. Applications for loan refinancing rose 7.3% (-31.9% y/y) following two consecutive weekly declines.
The share of applications for refinancing an existing loan rose to 28.4% of total applications in the July 14 week from 26.8% in the prior week. It was the highest share since the last week of March. In contrast, the adjustable-rate mortgage (ARM) share of activity fell to 6.3% in the latest week from 6.6% in the prior week.
The effective interest rate on a 30-year fixed-rate loan fell to 7.07% in the July 14 week from 7.28% in the prior week. The rate on 15-year fixed-rate mortgages declined to 6.54% from 6.72% in the previous week. The rate on a 30-year Jumbo loan declined 7.08% from the record 7.21% in the prior week. The rate on a 5-year ARM loan eased to 6.61% from a record 6.77% in the July 7 week.
The average size of a mortgage loan fell to $372,900 (+1.9% y/y) last week following a decline to $380,200 in the prior week. It remained higher than the average of $347,600 at the end of last year. The average size of a purchase loan declined to $418,600 (+3.0% y/y) in the July 14 week after rising to $426,100 in the prior week, while the average size of a loan to refinance a mortgage rose to $257,900 (-6.7% y/y).
The Mortgage Bankers 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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