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Purchase Surge Overcomes Mortgage Refi App Decline

Mortgage News

Even though refinance business slowed to the lowest level since the turn of the century, a surge in loan applications for purchase financing drove overall activity up.

After making adjustments for the Fourth of July holiday, the Market Composite Index for the week that concluded on July 6 moved up 2.5 percent from one week previous.

But when seasonal factors are disregarded, the index — a measure of retail residential loan application volume — plunged 18 percent from the week ended June 29.

Providing the data was the Mortgage Bankers Association based on its Weekly Mortgage Applications Survey. MBA said its survey covers more than three-quarters of all applications.

Applications for loans to refinance an existing mortgage fell 4 percent to the slowest pace since December 2000. Softening refinance activity came as refinance share plunged to 34.8 percent — the most narrow share since it was 34.0 percent in the week ended Aug. 29, 2008. The share was 37.2 percent in last week’s report and 42.1 percent in the same week during 2017.

This week’s report had applications for loans to finance a home purchase accelerating a seasonally adjusted 7 percent. Without the seasonal adjustments, purchase-money activity sank 15 percent but was 8 percent stronger than in the week ended July 7, 2017.

MBA said that applications for loans insured by the Federal Housing Administration accounted for a 10th of total activity, thinner than the 10.2 share as of a week earlier and 10.4 percent a year earlier.

Applications for mortgages guaranteed by the Department of Veterans Affairs made up 11.3 percent of the latest total, significantly wider than the 10.7 percent VA share the preceding week but thinner than 11.5 percent the same seven days in 2017.

Adjustable-rate mortgage share of applications thinned to 6.3 percent from 6.7 percent the prior week and a year prior.

The latest report had interest rates on jumbo mortgages 8 basis points lower than on conforming loans, the same spread as in the last report. The spread was only 3 BPS in the report from a year ago.

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