Smart Borrower Blog

Mortgage Applications Decline Again Amidst Lower Rates

Sep 4th, 2019 @ 8:23 PM by Amber Nelson

Even though long-term mortgage interest rates fell last week, demand for home mortgage loans continued to drop, according to data from the Mortgage Bankers Association.

The MBA’s mortgage application volume index decreased a seasonally adjusted 3.1% in the latest week. On a yearly basis though, application demand is up 62%.

The drop was led by a 7% decrease in refinance requests. However, refinance activity was still 152% higher than this time last year. Since interest rates have been dropping for the past month, the majority of those who can benefit from lower rates may have already refinanced lately. The refinance share of total mortgage volume decreased to 60.4% from 62.4% the week before.

Home purchase mortgage requests rose 4%, offsetting some of the drop in refinances. They also increased 5% compared with a year ago. Falling rates have a lesser impact on homebuying. However, high prices and a lack of inventory have been making it harder for potential buyers to jump into the market.

During the same period the average interest rates on a 30-year fixed-rate mortgage with conforming balances sank to 3.87% with 0.34 point, down from 3.94% the previous week, and down from 4.8% a year ago.

“Ongoing trade tensions between the U.S. and China led to volatile, yet declining Treasury rates last week, causing the 30-year fixed mortgage rate to fall to 3.87%, its lowest level since November 2016,” said Joel Kan, MBA associate vice president of economic and industry forecasting. He added, “Consumers continue to act on these lower rates, but the volatility in the market is likely leading some borrowers to pause refinancing and buying decisions.”

Last week adjustable-rate mortgages lost some popularity as requests for ARM loans decreased to 5.7% of total applications. FHA loan requests made up 10.2%, down from 10.5% while VA loan applications rose to 11.3% from 9.9%. The USDA loan share made up 0.6% of all mortgage requests, up from 0.5%.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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