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MBA: Lower rates push refinance applications higher

Mortgage applications are up from one week earlier, thanks to lower rates that may be encouraging borrowers to refinance.

That’s according to the latest weekly mortgage applications survey from the Mortgage Bankers Association (MBA), which compiled data for the week ending March 15, 2019.

The MBA’s market composite index, which tracks mortgage application volume, is up 1.6 percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index increased 2 percent.

The refinance index increased 4 percent from the previous week, while the purchase index is up 0.3 percent on a seasonally adjusted basis from the prior week. Year over year, the purchase index is up 1 percent.

“Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors' demand for U.S. Treasurys, ultimately pushing yields lower," said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.

"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 (2018). 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.”

Kan also noted that entry-level housing supply remains low, keeping some potential first-time buyers from initiating purchases.

“This — along with faster growth in the higher price tiers — is why the average loan application size has risen to a new high for three straight weeks,” Kan said.

The refinance share of mortgage activity increased to 39.2 percent of total applications, up from 38.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.1 percent of total applications.

The Federal Housing Administration (FHA) share of total applications remained flat compared to the previous week at 10.4 percent. The U.S. Department of Veterans Affairs (VA) share of total applications increased from 10.2 percent to 10.6 percent, while the U.S. Department of Agriculture (USDA) share of total applications remained unchanged at 0.6 percent.

The average interest rate for 30-year fixed-rate mortgages (FRM) decreased from 4.64 percent to 4.55 percent, with average points decreasing from 0.47 to 0.42 (including the origination fee).

The average contract interest rate for a 30-year jumbo FRM decreased from 4.45 percent to 4.37 percent. The average rate for 30-year FRMs backed by the FHA decreased from 4.61 percent to 4.59 percent.

The average contract interest rate for a 15-year FRM decreased from 4.02 percent to 3.97 percent, while the average rate for a 5/1 ARM decreased from 4.09 percent to 3.99 percent.


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