Lower Loan Rates Boost Applications for New Mortgages
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 1.6% in the group’s seasonally adjusted composite index for the week ending March 15. Mortgage interest rates decreased on all five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index rose by 2% in the last week. The seasonally adjusted purchase index increased by 0.3% compared with the week ended March 8. The unadjusted purchase index rose by 1% for the week and was 1% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan dropped from 4.45% to 4.40% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were still paying 4.40% for that loan. The yield on a 10-year U.S. Treasury note ticked up in the last week from 2.60% to 2.61% as of last night’s close. A year ago the 10-year note yielded 2.85%.
Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting said:
Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors’ demand for U.S. Treasuries, ultimately pushing yields lower. Rates for most loan types were at their lowest levels in over a year, with the 30-year fixed mortgage rate falling to 4.55 percent – its lowest reading since last February. Although lower rates sparked a 3.5 percent increase in refinance applications, purchase activity was up only slightly last week and from a year ago.
The MBA’s refinance index increased by 4% week over week, and the percentage of all new applications that were seeking refinancing increased from 38.6% to 39.2%.
Adjustable rate mortgage loans accounted for 7.1% of all applications, down 0.1 percentage point compared with the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 4.64% to 4.55%. The rate for a jumbo 30-year fixed-rate mortgage slipped from 4.45% to 4.37%. The average interest rate for a 15-year fixed-rate mortgage dipped from 4.02% to 3.97%.
The contract interest rate for a 5/1 adjustable rate mortgage loan dropped from 4.09% to 3.99%. Rates on a 30-year FHA-backed fixed-rate loan decreased from 4.61% to 4.59%.