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Refis Pull Down Mortgage Apps, Share at Decade Low

Mortgage News

Although there was a modest rise in purchase-money applications, a drop in refinances drove down overall mortgage applications. Refinance share was the thinnest it’s been in a decade.

In the seven days that concluded on March 16, the Market Composite Index retreated from one week previous by more than a seasonally adjusted 1 percent.

Even without considering seasonal factors, the index, which is a
measure of retail residential loan applications, still moved lower by 1 percent.

The index
was derived from the Weekly Mortgage Applications Survey reported Wednesday by the Mortgage Bankers Association. The survey reportedly reflects more than three quarters of all applications.

A more steep decline from the week ended March 14 was recorded for refinance applications, which fell 5 percent. The weakening in refinances came as refinance share thinned to 38.5 percent — it’s most narrow share since it was 36 percent in the week ended Sept. 5, 2008. Refinance share was 40.1 percent a week earlier
and 45.1 percent a year earlier.

But applications
for loans to finance a home purchase increased a seasonally adjusted 1 percent from the preceding seven-day period. Foregoing seasonal adjustments, purchase financing activity rose 2 percent from the last report and was 6 percent stronger than in the week ended March 17, 2017.

Applications for mortgages insured by the Federal Housing Administration accounted for 10.3 percent of the latest weekly total, off from 10.4 percent the prior week and down from 10.9 percent a year prior.

Another 10.7 percent of the latest week’s activity was applications for loans guaranteed by the Department of Veterans Affairs. VA share widened from 10.3 percent in the last report
and 10.1 percent in the year-earlier report.

Seven percent of all applications were for adjustable-rate mortgages, slightly less than the 7.1 percent share as of the report from a week ago. ARM share was
much thinner than 9.0 percent from the same week a year ago.

On jumbo mortgages, interest rates were 13 basis points lower than conforming rates. The spread was a little more narrow than 14 BPS in the preceding seven-day period but much wider than 6 BPS during the same-seven days last year.

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