According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Sept. 9, mortgage applications have decreased by 1.2% from a week earlier. The Market Composite Index results for the week include an adjustment for the observance of Labor Day. The index decreased 12% compared with the previous week on an unadjusted basis.
From the previous week, the refinance index decreased 4% and is 83% lower than the same week a year ago. “The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008—rising to 6.01%—which is essentially double what it was a year ago,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“Higher mortgage rates have pushed refinance activity down more than 80% from last year and have contributed to more home buyers staying on the sidelines. Government loans, which tend to be favored by first-time buyers, bucked this trend and increased over the week, driven mainly by VA and USDA lending activity.
"The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The wide spread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.”
For 30-year fixed-rate mortgages with conforming loan balances ($647,000 or less), the average contract interest rate increased to 6.01% from 5.94% with points decreasing to .76 from .79 for 80% loan-to-value (LTV) ratio loans. For jumbo loans greater than $647,000, the average contract interest rate for 30-year fixed-rate mortgages increased to 5.56% from 5.46% and points decreased to .39 from .40 for 80% LTV loans.
For 5/1 ARMs, the average contract interest rate increased to 4.82% from 4.81% with points decreasing to .52 from .88 for 80% LTV loans. Regarding applications, the ARM share of activity increased to 9.1%.
Average contract interest rates for FHA-backed 30-year fixed rate mortgages rose from 5.61% to 5.71%, with points increasing to 1.12 from 1.06 for 80% LTV loans. From the week prior, the FHA share of total applications increased to 13.4% from 13.3%; the VA share increased to 11.3% from 10.8%; and the USDA share increased to 0.7% from 0.6%.
The survey covers over 75% of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks, and thrifts.
