The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a jump of 21.7% in the group’s seasonally adjusted composite index for the week ending August 9. Mortgage interest rates fell on four of five types of loans the MBA tracks. As was the case in the prior week, the falling rates have hit their lowest level since November 2016.
On an unadjusted basis, the MBA’s composite index increased by 20% in the past week. The seasonally adjusted purchase index increased by 2% compared with the week ended August 2. The unadjusted purchase index also rose by 1% for the week and was 12% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan fell by nearly 0.5 percentage points to 3.64% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 3.70% for that loan. The week-over-week yield on a 10-year U.S. Treasury note dipped from 1.72% to 1.65% as of last night’s close. A year ago, the 10-year note yielded 2.88%.
Joel Kan, MBA’s associate vice-president of economic and industry forecasting, said:
The 2019 refinance wave continued, as homeowners last week responded to extraordinarily low mortgage rates. Fears of an escalating trade war, combined with economic and geopolitical concerns, once again pulled U.S. Treasury rates lower. The 30-year fixed mortgage rate [has] decreased [to its] lowest level since November 2016 … and has now dropped more than 80 basis points this year. In just the last two weeks, rates have decreased 15 basis points and the refinance index has increased more than 50 percent, reaching its highest level since July 2016. The government refinance index, driven by a 25 percent increase in VA refinance applications, is now at its highest level since May 2013.
The MBA’s refinance index increased by 37% week over week, and the percentage of all new applications that were seeking refinancing rose from 53.9% to 61.4%.
Adjustable-rate mortgage loans accounted for 6% of all applications, up by 1.3 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 fell from 4.01% to 3.93%. The rate for a jumbo 30-year fixed-rate mortgage dropped from 3.96% to 3.88%. The average interest rate for a 15-year fixed-rate mortgage slipped from 3.37% to 3.28%.
The contract interest rate for a 5/1 adjustable-rate mortgage loan rose from 3.36% to 3.43%. Rates on a 30-year FHA-backed fixed-rate loan decreased from 3.86% to 3.81%.