Smart Borrower Blog

Mortgage Applications Jump as Rates Rest


Jul 21st, 2017 @ 9:45 PM by Amber Nelson


A pause in mortgage interest rates may have helped push the volume of home loan applications higher in the latest week , according to data from the Mortgage Bankers Association. The rise came mostly from refinance requests as home purchase application volume saw little change.

The MBA’s seasonally adjusted Market Composite Index, a measure of loan application volume, rose 6.3 percent during the week ended July 14, 2017. Compared with a year ago though when mortgage rates were lower, the index reading is down 31 percent.

Home purchase application volume rose just 1 percent in the latest week, reflecting the continued issue of affordability in the housing market. Home purchase loan requests were 7 percent the previous year.

Meanwhile, as rates held steady for 30-year fixed rate mortgages at 4.22 percent with an average of 0.31 points, the number of homeowners interested in refinancing their loans jumped 13 percent from the week earlier. Refinance applications made up 44.7 percent of total loan request volume, up from 42.1 percent the week before.

The MBA says that borrowers may have acted in anticipation of higher rates, even though there are signs that the economy is not moving as fast as previously thought. “Treasury yields were slightly lower last week as testimony from [Fed Chair Janet] Yellen was perceived to be more dovish than expected, and as the market received data signaling weaker inflation and retail sales for June,” said MBA economist Joel Kan. “These factors kept the 30-year fixed-contract rate flat over the week.”

Adjustable rate mortgages (ARMs) continue to be a marginally-used product in the aftermath of the housing crisis. ARM applications made up just 6.7 percent of all loan requests, unchanged from the previous week.

Government-backed loans saw only slight changes in application volume. The FHA share of total applications increased to 10.7 percent, up from 10.4 percent while VA loan requests declined to 10.7 percent from 11.5 percent.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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