Will Mortgage Applications Keep the Housing Recovery Story Alive?
Applications for home mortgages in the United States decreased for the third time in four weeks, despite a dip in interest rates.
According to the Mortgage Bankers Association’s latest report for the week ending March 29, loan application volume declined 4.0 percent on a seasonally adjusted basis from one week earlier. This comes after a 7.7 percent jump. On an unadjusted basis, the index still dropped 4.0 percent. These figures include both refinancing and home purchase demand, and covers over 75 percent of all domestic retail residential mortgage applications.
The industry group’s Refinance Index fell 6.0 percent from the previous week, while the Purchase Index rose 1.0 percent. On an unadjusted basis, the Purchase Index increased 2.0 percent and was 4.0 percent higher than the same week one year ago. As the chart above shows, the purchase applications index is still on the rise, but well below its glory days…
“Total purchase applications increased last week, due to an almost 7 percent increase in purchase applications for government loans. This was likely driven by borrowers applying for loans prior to the scheduled increase in FHA premiums that took effect on April 1,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “On a year over year basis, purchase applications are up about 4 percent, in line with the trend we are seeing in home sales volumes.”
Overall, the refinance share of mortgage activity edged lower to 74 percent of total applications. The refinance share declined for ten straight weeks earlier this year, and is at its lowest level since May 2012.
The average interest rate for a 30-year fixed-rate mortgage came in at 3.76 percent, down from 3.79 percent in the prior week. The week ending March 15 posted the highest contract rate since August 2012 at 3.82 percent. Points on the average mortgage decreased from 0.44 to 0.43 (including the origination fee). The average rate for a 15-year fixed-rate mortgage decreased from 3.02 percent to 2.99 percent.
In morning trading, homebuilders such as Lennar (NYSE:LEN) and D.R. Horton (NYSE:DHI) both fell nearly 1.0 percent. Shares of Wells Fargo (NYSE:WFC), the nation’s largest home lender, declined 0.70 percent.
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