Refinance Window Closing Fast: Recent Applications Plunge 22 Percent

Even after adjusting for the holidays, Mortgage Refinance Activity plunged a steep 22%.

The Mortgage Bankers Association returned from its holiday hiatus today, issuing its first update on mortgage applications’ activity since that for the week ended December 16. The results thus include data for the last two weeks and an adjustment to account for the Christmas holiday.

The Market Composite Index, a measure of application volume, for the week ended December 30 was down 12 percent on a seasonally adjusted basis compared to the December 9 summary. Before the adjustment, the drop in application activity was 48 percent.

The Refinance Index decreased 22 percent from two weeks earlier and the seasonally adjusted Purchase Index declined by 2 percent. The unadjusted Purchase Index was 41 percent lower than the two-week old reading and lost 1 percent when compared to the same week in 2015.

Purchase Applications vs. 30-Year Rates:

https://mishgea.files.wordpress.com/2017/01/purchase-applications-vs-30-year.png?w=529&h=358

Its difficult to say at what point consumers thrown in the towel on new home purchases as a number of factors are in play.

Refinance Window Closing Fast:

https://mishgea.files.wordpress.com/2017/01/refinaance-window-closing-fast.png?w=529&h=344

Refis show a clear pattern. Only those whose interest rate is above the red dotted line is likely to refi. Given closing costs, it’s only profitable to refi when rates are substantially above the red line.

Bear in mind this data is for a slow holiday period. Nonetheless, refi applications behave as expected.

Three rate hikes in 2017? I don’t think so.

By Mike “Mish” Shedlock


Mortgage Application Activity Wraps Up 2016 on a Down Note

Residential loan application activity continued its post-election slump, declining for the sixth time in the eight weeks, according to the Mortgage Bankers Association’s survey for the week ending Dec. 30. The results included adjustments to account for the Christmas holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 12% on a seasonally adjusted basis from two weeks earlier, the last time the MBA conducted its Weekly Application Survey. On an unadjusted basis, the index decreased 48% compared with two weeks ago. The refinance index decreased 22% from two weeks ago.

The seasonally adjusted purchase index decreased 2% from two weeks earlier, while the unadjusted purchase index decreased 41% compared with two weeks ago and was 1% lower than the same week one year ago.

The refinance share of mortgage activity increased to 52.2% of total applications from 51.8% over the previous seven-day period.

Interest rate comparisons are made with the period ended Dec. 23. The adjustable-rate mortgage share of activity decreased to 5.4%, while the Federal Housing Administration share increased to 11.6% from 10.7% the week prior.

The VA share decreased to 12.3% from 12.4% and the USDA share increased to 1.1% from 1% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.39% from 4.45%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000), the average contract rate decreased to 4.37% from 4.41%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4.22%, while for 15-year fixed-rate mortgages backed by the FHA, the average decreased to 3.64% from 3.7%.

The average contract interest rate for 5/1 ARMs decreased to 3.28% from 3.41%.

By Glenn McCullom | National Mortgage News

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