Mortgage Loan Rates Ticked Lower Again, Applications Post Tiny Gain

The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a slight increase of 0.1% in the group’s seasonally adjusted composite index for the week ending August 11. During the week, mortgage loan rates fell on three of the five loan types that the MBA tracks.

On an unadjusted basis, the composite index decreased by 1% week over week. The seasonally adjusted purchase index decreased by 2% compared with the week ended August 4. The unadjusted purchase index decreased by 3% for the week and is now 10% higher year over year.

The MBA’s refinance index increased by 2% week over week, and the percentage of all new applications that were seeking refinancing rose from 46.7% to 47.8%, its highest level since February.

Adjustable rate mortgage loans accounted for 6.6% of all applications, down 0.2 percentage points from the prior week.

The harsh language between the United States and North Korea drove demand (and prices) for bonds higher last week. When bond prices rise, mortgage loan rates decline. By Sunday, North Korea retreated on its threat to nuke Guam, and investors fled the bond markets, sending bond prices down and mortgage loan rates higher. Not a lot higher, but up from the nine-month lows available last Friday. The most prevalent loan rate for top-tier borrowers remains at 4%.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage dropped from 4.14% to 4.12%, the lowest level since last November. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.07% to 4.04%. The average interest rate for a 15-year fixed-rate mortgage remained unchanged at 3.41%.

The contract interest rate for a 5/1 adjustable rate mortgage loan rose from 3.31% to 3.34%. Rates on a 30-year FHA-backed fixed rate loan slipped from 4.02% to 4.01%.