Mortgage Applications Fall Despite Interest Rate Drop
Feb 6th, 2019 @ 10:43 AM by Amber Nelson
Mortgage application volume fell for the third consecutive week, even as interest rates took a dive, according to the Mortgage Bankers Association.
The MBA’s seasonally adjusted index saw mortgage application requests fall by 2.5% in the latest week and almost 10% from the previous year. Most of that decrease came from a 5% drop in home purchase applications.
“Despite more favorable borrowing costs, and after a three-week surge in activity, purchase applications have slowed over the past two weeks, and are now almost 2 percent lower than a year ago,” said Joel Kan, an MBA economist. “However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.”
“Refinance applications saw a very slight increase compared to the previous week, despite the broad decline in rates,” Kan added. Refinance applications rose just 0.3%, even though the average rates on a 30-year fixed-rate conforming mortgage fell to 4.69% with 0.45 points, from 4.76% with 0.47 points the week before. In that past that type of dramatic interest rate drop would have spurred a mass of borrowers to cash in on the savings, but rates have been low for so long that there are very few borrowers left who haven’t already taken advantage of refinancing.
As a result, the refinance share of mortgage application volume decreased to 41.6% of all requests, down from 42.0% a week ago.
Adjustable rate mortgages were slightly less popular as well, falling to 7.8% of all mortgage volume.
Government-backed loans were a mixed bag this week, with FHA mortgage applications making up 10.5% of total requests, unchanged from last week. The VA loan share fell to 10.0% of application volume, down from 10.7% and USDA loans made up 0.5% of requests, up slightly from 0.4% the previous week.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.