Mortgage activity declined slightly last week as purchase activity slowed on a seasonal basis, remaining 20% higher than a year ago, however.
Applications for mortgages fell 0.3% from the week before, according to a survey from the Mortgage Bankers Association (MBA) for the week ending Oct. 17. The association’s seasonally adjusted and unadjusted purchase indexes each fell 5% from the previous week, though refinance applications rose 4%.
Mortgage applications have now notched four consecutive weeks of declines. In a press release, the MBA said little about what may be driving the declining activity despite mortgage rates hovering near their lowest levels in a month.
The rate dip spurred a bump in refinances, noted Joel Kan, deputy chief economist at the MBA, “as borrowers remain attentive to these opportunities to lower their monthly mortgage payment.”
The refinance component index remained 81% higher than a year ago. The refinance share of mortgage activity increased to 55.9% of total applications from 53.6% the previous week.
Kan noted a 6% boost in conventional refinances last week and a 12% boost in refinance loans backed by the Federal Housing Administration (FHA), while refinances backed by the Department of Veterans Affairs (VA) plunged 12%.
He also noted that applications for adjustable-rate mortgages (ARM) rose 16% on a weekly basis to comprise 10.8% of total applications, remaining elevated on account of the substantial gulf between mortgage rates for ARMs versus traditional mortgage products.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 6.37% from 6.42% the week prior, while the average interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.12% from 6.19%.
The average contract interest rate for 5/1 ARMs — whereby a borrower pays a fixed mortgage rate for the first five years of the loan term, after which it adjusts on an annual basis — fell to 5.55% from 5.63%, roughly 80 basis points lower than average 30-year rates.
The FHA share of total applications rose to 21.8% from 20.5% the previous week, while the VA share of total applications decreased to 13.5% from 14.9%. Last week’s share of mortgage applications backed by the U.S. Department of Agriculture fell to 0.3% from 0.4%.
