The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 5.9% in the group's seasonally adjusted composite index. That followed a drop of 3.3% for the previous week. Mortgage loan rates rose last week on adjustable rate mortgage loans, but decreased or remained unchanged on other types of mortgage loans.
The seasonally adjusted purchase index decreased by 4% from the prior week's report. On an unadjusted basis, the composite index decreased by 5% week-over-week. The unadjusted purchase index dropped 4% for the week, and remains 21% lower year-over-year.
Adjustable rate mortgage loans account for 8% of all applications, unchanged from last week.
The MBA's refinance index decreased by 7%, after dropping by 1% in the previous week. The share of refinancings fell from 51% to 50% of all applications, the lowest share total since July of 2009.
The average mortgage loan rate for a conforming 30-year fixed-rate mortgage remained unchanged at 4.49%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.41% to 4.37%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.55% to 3.53%.
The contract interest rate for a 5/1 adjustable rate mortgage loan rose from 3.16% to 3.26%. Rates on a 30-year FHA-backed fixed rate loan fell from 4.20% to 4.17%.
The MBA's chief economist noted:
Both purchase and refinance application activity fell last week, and the market composite index is at its lowest level since December 2000. … The refinance index dropped 7 percent to the lowest level since 2008, continuing the declining trend that we have seen since May 2013.
Even though mortgage loan rates remain historically low, they have risen about a full point in the past year and that has virtually shut down the mortgage lending business. Adjustable rate mortgages are still priced quite low, but the market for these has slowed again because it is clear that mortgage rates are virtually certain to rise in the future, which will raise the payments on these loans potentially causing severe problems for the borrower.
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