Declining mortgage rates push refinances to a 3-year high
The Market Composite Index rises a whopping 26.8%
Despite growing economic tension, mortgage applications continued to climb, according to the Mortgage Bankers Association.
On an unadjusted basis, the Market Composite Index rose 26.8% for the week ending June 7, 2019, according to MBA’s weekly Mortgage Applications Survey.
“Mortgage rates for all loan types fell by a sizable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials, and weaker than expected hiring in May,” MBA Vice President of Economic and Industry Forecasting Joel Kan said. “Despite the less positive outlook, both purchase and refinance applications surged, driven mainly by these lower rates. The refinance index jumped 47% to its highest level since 2016.”
The Refinance Index spiked 47% from the previous week and the unadjusted Purchase Index climbed 20% from a week ago and remained 10% higher than the same week in 2018. Lastly, the seasonally adjusted Purchase Index ticked up 10% from the week before.
“With the 30-year fixed-rate mortgage at its lowest level since September 2017, purchase activity was more than 10% higher than a year ago,” Kan said. “Demand is still relatively strong, but there is likely some restraint from prospective buyers, driven by some economic uncertainty. Furthermore, housing supply is still very tight for first-time buyers.”
Here’s a more detailed breakdown of this week’s mortgage application data:
The refinance share of mortgage activity increased to 49.8% from last week’s 42.2%.
The adjustable-rate mortgage share of activity increased to 7.9% of total applications.
The Federal Housing Administration’s share of mortgage apps fell from last week’s 9.5% to 8.9%.
The Veterans Affairs’ share of applications moved backward to 11% from last week’s 11.3%.
The Department of Agriculture’s share of total applications held steady from last week’s 0.6%.
Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) retreated from last week’s rate of 4.23% to 4.12%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) slid from last week’s 4.09% to 4.04%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA dropped from last week’s 4.24% to 4.09%.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.53% from 3.65% the week prior.
The average contract interest rate for 5/1 ARMs fell to 3.43% from last week’s 3.62%.