Purchase Financing Leads Drop in Mortgage Apps

The Market Composite Index for the week ended Feb. 17 was down a seasonally adjusted 2 percent from one week previous.

When no adjustments are made for seasonal factors, the index, a measure of retail loan applications, moved down 1 percent .

The Mortgage Bankers Association reported the index, which is included in the Weekly Mortgage Applications Survey. MBA said the survey
covers over 75 percent of all U.S. retail residential mortgage applications.

Applications for refinances
slipped 1 percent from the week ended Feb. 10 and accounted for 46.2 percent of all activity — the smallest share since November 2008. Refinance share was trimmed from 46.9 percent a week earlier and slashed from 61.0 percent a year earlier.

The trade group said that applications for loans to finance a home purchase declined 3 percent from the last report on a seasonally adjusted basis. But without considering seasonal factors, the Purchase Index moved up 2 percent on a week-over-week basis and jumped by a 10th on a year-over-year basis — though the year-prior period included the Presidents Day holiday.

A drop was recorded for the share of applications that were for loans insured by the Federal Housing Administration, to 11.6 percent from 11.9 percent. FHA share was also down from the same seven-day period last year, when it was 12.0 percent.

Applications for mortgages guaranteed by the Department of Veterans Affairs represented
12.1 percent of the most-recent week’s total, more than 11.8 percent the previous week. VA share was more narrow, however, than 13.0 percent twelve months earlier.

Interest rates on jumbo mortgages were 7 basis points lower than conforming rates. The jumbo-conforming spread widened from a negative 4 BPS the previous week and a negative 5 BPS a year previous.