Mortgage applications drop as refinances hit 10-year low

by Steve Randall22 Mar 2018

There was a drop in new mortgage applications last week as refinance loans outpaced growth for purchase loans.

The Mortgage Bankers Association’s Market Composite Index was down overall by 1.1% on a seasonally-adjusted basis (1% unadjusted).

The refinance index was down 5% from the previous week, while the purchase index gained 1% seasonally adjusted and 2% unadjusted. The purchase index was also 6% higher than a year ago.

The drop in refinance mortgages saw their share of overall applications falls to just 38.5%, the lowest share since September 2008. A week earlier the share was 40.1%.

ARMs decreased to 7% of all applications.

FHA loans accounted for 10.3% of all applications (10.4% the previous week); VAs made up 10.7% (from 10.3%); USDAs were 0.8% (from 0.9%).

The average contract rates for 80% LTV loans were:

  • 4.68% for 30-year conforming FRMs (with 0.46 point);
  • 4.55% for 30-year jumbo FRMs (0.37 point);
  • 4.69% for FHA-backed 30-year FRMs (0.81 point);
  • 4.12% for 15-year FRMs (0.51 point) – this was the highest since April 2011;
  • 3.83% for 5/1 ARMs (0.68 point)

Effective rates were up for 30-year jumbos and 15-year FRMs; down for FHAs and 5/1 ARMs; and unchanged for 30-year conforming loans.

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