Purchase and Refi Mortgage Applications Rise Slightly Post Fed Rate Cut

WASHINGTON—After a near 30% increase in mortgage applications the previous week and a near 60% rise in refinance activity, mortgage applications increased just 0.6% from one week earlier, according to data from the Mortgage Bankers Association for the week ended Sept. 19.

The refinance share of mortgage activity increased to 60.2% of total applications from 59.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.9% of total applications. The Federal Reserve Board lowered the federal funds rate by a quarter percentage point on Sept. 17.

The Refinance Index increased 1% from the previous week and was 42% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.3% from one week earlier, the MBA reported.

The FHA share of total applications decreased to 15.7% from 16.3% the week prior. The VA share of total applications increased to 17.5% from 15.8% the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the week prior.

“Mortgage rates declined further last week, with the 30-year fixed rate falling to its lowest level since last September to 6.34%. Interest rates generally have moved up following the FOMC meeting last week but remain in a range that should continue to lead to increased refinance activity. Refinance volume increased further last week and is now 80% higher than four weeks ago, accounting for more than 60% of all application activity,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

He added, “The refinance boost last week was from government applications, with VA refinance volume up almost 15%. While homebuyer demand typically tends to decrease during the fall, purchase application activity remains relatively strong right now, running 18% ahead of last year’s pace.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.34% from 6.39%, with points increasing to 0.57 from 0.54 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.44% from 6.48%, with points decreasing to 0.34 from 0.35 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 6.14%, with points increasing to 0.74 from 0.68 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.70% from 5.63%, with points increasing to 0.69 from 0.58 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 5/1 ARMs decreased to 5.53% from 5.65%, with points increasing to 0.49 from 0.41 (including the origination fee) for 80% LTV loans.