Applications

The Shifting Mortgage Application Volume – The MReport


Mortgage applications saw a 5.6 percent decrease week over week, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) and the MBA’s Market Composite Index. Mike Fratantoni, MBA SVP and Chief Economist, notes the changes in mortgage rates and its impact on applications.

“Mortgage rates inched back up last week, but remain substantially lower than they were in the second half of last year,” said Fratantoni. “As quickly as refinance activity increased in recent weeks, it backed down again in response to the rise in rates. However, this spring’s lower borrowing costs, coupled with the strong job market, continue to push purchase application volume much higher. Purchase applications are now up more than 13 percent compared to last year at this time.”

While applications decreased week over week, the risk on those applications has increased. The frequency of defects, fraudulence, and misrepresentation in the information submitted in mortgage loan applications increased by 4.4 percent in February compared with the previous month, according to First American’s latest Loan Application Defect Index. Year over year, the index rose 14.5 percent.

An increase in purchase loans as refis dried up and a competitive housing market with increasing home prices and low inventory for the most part of 2018 were responsible for this rise as buyers faced pressure to seek qualification for larger loan amounts, according to Mark Fleming, Chief Economist First American.

According to the MBA, refinances dropped during the week as well, down from 47.4 percent to 44.1 percent of total applications.

By lender, FHA application share increased to 9.6 percent from 8.8 percent the week prior, while the VA share of total applications increased to 11.1 percent from 10.4 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.42 percent from 4.41 percent, with points remaining unchanged at 0.48 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.83 percent from 3.78 percent, with points increasing to 0.42 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

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