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Mortgage Applications down

The Mortgage Bankers Association’s Market Composite Index — a measure of loan application volume — fell 2.2% from the week before on a seasonally adjusted basis, with the refinance segment dropping 4% week-over-week and 39% year-over-year.

It marks the lowest point for the refi index since September 2020. The refi share of application activity also fell weekly to 62.9% from 64.5%. However, the purchase application index grew in contrast, climbing 2% on a seasonally adjusted basis over last week. Unadjusted, purchases rose 3% from the previous week and by 5% annually.

Boston real estate

Boston real estate

The average for the 30-year fixed rate mortgage increased to its highest level since June 2020, having surged 36 basis points from the beginning of February.

The adjustable-rate mortgage share of activity dipped to 2.7% from 3% the week before. By product type, Federal Housing Administration mortgages made up 11.7% of this week’s applications, up slightly from 11.6% week-over-week, with Veterans Affairs loans decreasing to 10.3% from 11.1% while the U.S. Department of Agriculture/Rural Housing Service share remained at 0.4%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $548,250 or less — rose to 3.28% from 3.26%.

The average contract interest rate for jumbo loans — those over $548,250 in value — held at 3.34%. The average contract interest rate for the 30-year FHA-insured mortgage jumped to 3.25% from 3.2%.

The average contract interest rate for 15-year FRMs increased to 2.67% from 2.63% and the average contract interest rate for 5/1 ARMs spiked to 2.82% from 2.69%, with points falling to 0.3 from 0.37.

 

The volume of mortgage applications declined 2.5 percent for the week ending Sept. 11, 2020, according to the Mortgage Bankers Association’s (MBA) weekly survey. The data included an adjustment for the Labor Day holiday.

On an unadjusted basis, the market composite index, which measures mortgage loan application volume, decreased 13 percent compared to the previous week. The refinance index declined 4 percent from the previous week but increased 30 percent year-over-year.

The seasonally adjusted purchase index decreased 1 percent from the week before while the unadjusted purchase index dropped 12 percent from the week prior and rose 6 percent year-over-year.

Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “A 5 percent decline in conventional refinances pulled theoverall index lower, but activity was still 30 percent higher than last year. With the flurry of refinancing activity reported over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizeable drop in rates.”

Now the fun starts. I hope that real estate & mortgage brokers out there have had enough business to survive through the summer months. Even with historic low rates, mortgage applications have fallen 27.1 percent during the month.

Hmm…can we thank the expiration of the government tax credit for this drop?

Some would claim that the tax credit did boost housing activity. But others might argue that all it did was pull forward sales transactions, so it didn’t add much new volume into the system. Net result: taxpayers’ money is transferred to homebuyers, but no new real activity in the marketplace.

What am I seeing? One metric that I use (not very scientific) is that I can get a good idea what future sales will look like based on my internet sales leads. I hope this unproven sales analysis stays unproven because I have seen a major drop off on internet sales leads in the last two weeks.

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