Mortgage applications were completed last week at a rate that was stronger than the preceding week. Although mortgage rates have risen to a seven-year high, refinance share still reached its widest level in six months.
Consumers interested in obtaining a home loan submitted mortgage applications during the seven days ended Sept. 21 at a pace that was a seasonally adjusted 2.9 percent greater than the previous week. Activity has improved two weeks in a row.
That was based on
the Market Composite Index, which moved higher by just 2 percent when seasonal factors are disregarded. The index is a measure of retail residential loan applications.
Reporting the index Wednesday was the Mortgage Bankers Association. The trade group drew its conclusions from its Weekly Mortgage Applications Survey, which reportedly covers more than three-quarters of all applications.
Applications for refinances increased 3 percent from the week ended Sept. 14 as refinance share widened to 39.4 percent — the most broad it’s been since the week ended March 23.
Historical data from Mortgage Daily’s U.S. Mortgage Market Index report indicate that rate-term refinance share of 10.6 percent in the week ended Sept. 21 was the widest it’s been since the week ended March 9. But the cashout refinance share has thinned to 26.6 percent from 28.8 percent during that same period.
The widening rate-term share is highly unusual given that MBA reported conforming 30-year fixed rates at 4.97 percent — their highest level since April 2011. Rate-term activity historically has had an inverse relationship with interest rates and typically declines as rate ascend.
Total refinance share was 39.0 percent during the preceding seven-day period, while it came in at 50.8 percent in the same week last year.
MBA said applications for loans to finance home purchases increased 3 percent on a seasonally adjusted basis. The rise was just 2 percent without seasonal adjustments, while the year-over-year escalation was 4 percent.
Out of all applications submitted, applications for loans insured by the Federal Housing Administration accounted for 10.4 percent. FHA share thinned from 10.6 percent in the prior report but was more fat than 9.6 percent a year prior.
Another
10.1 percent of applications were for mortgages guaranteed by the Department of Veterans Affairs. VA share was a 10th the preceding week and the week ended Sept. 22, 2017.
The trade group reported that 6.5 percent of all applications were for adjustable-rate mortgages. There was no change from a week earlier or a year earlier in ARM share,
Rates on jumbo mortgages were 5 basis points lower than conforming rates. The spread was slashed from 11 BPS in last week’s report but was no different than in the year-previous report.
