Lower Interest Rates Don't Halt Decline in New Mortgage Loan Applications
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 4.3% in the group’s seasonally adjusted composite index for the week ending April 26. Mortgage interest rates decreased on all five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index fell by 4% in the past week. The seasonally adjusted purchase index decreased by 4% compared with the week ended April 19. The unadjusted purchase index fell by 3% for the week and was 1% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan dipped slightly to 4.27% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.30% for that loan. The yield on a 10-year U.S. Treasury note slipped last week from 2.57% to 2.50% as of last night’s close. A year ago the 10-year note yielded 2.95%.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said:
Mortgage rates were lower last week – with the 30-year fixed rate declining to 4.42 percent – as concerns over global growth, particularly in Germany, outweighed more positive domestic news on first quarter GDP growth and business investment. Applications to refinance and purchase a home both fell, but purchase activity still remained slightly above year ago levels. The drop in refinances were driven by fewer FHA and VA loan applications, which typically lag the movement of conventional loans.
The MBA’s refinance index decreased by 5% week over week, and the percentage of all new applications that were seeking refinancing dropped from 39.4% to 38.8%.
Adjustable rate mortgage loans accounted for 6.2% of all applications, down 0.2 percentage points 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 4.46% to 4.42%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.35% to 4.31%. The average interest rate for a 15-year fixed-rate mortgage dropped from 3.87% to 3.81%.
The contract interest rate for a 5/1 adjustable rate mortgage loan fell from 3.92% to 3.81%. Rates on a 30-year FHA-backed fixed rate-loan decreased from 4.49% to 4.39%.