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Mortgage Apps: Inch Higher, Rebounding From Seasonal Slowness

January 11, 2017

Bottom Line: Mortgage rates fell in the first week of the new year with the curve flattening modestly as 30-year mortgage rates fell 7bps on the week, while 5-year Adjustable Rate Mortgage (ARM) rose 4bps. While ARM volume was increasing into the middle of December, it has fallen back to just 5.5% of total application volume as overall applications have fallen amid seasonal slowness. Overall the trend remains, refinancing applications have fallen to the lows of the last 5+ years when looking at 4-week averages while purchase applications have continued to hold in a slow uptrend. But with the seasonal volatility behind us, 30-year mortgage rates still below where they spent much of mid-'13 to mid-'14, and the 5-year ARM still a full 100bps below the 30-year fixed-rate, we'll be watching these trends closely.

The MBA Mortgage Applications Index ROSE by 5.8% during the week ended January 6 to 379.2, sharply below its 13 week average of 430.8 and 4.8% BELOW its year ago level.

The Purchase Index ROSE by 6.1% to 241.9, moderately above its 13 week average of 223.7 and 4.7% ABOVE its year ago level. The level of purchase activity had stayed quite low after the crisis until 2015 when it started to rise. But that trend has lost momentum since mid-2016.

The Refinance Index ROSE by 4.4% to 1,182. Despite this increase, refinancing activity is sharply below its 13 week average of 1,630 and 14.4% BELOW its year ago level.

Contract Mortgage Rates FELL with the 30-year fixed rate declining by 7 bps to 4.32% and with the 15-year fixed rate declining by 8 bps to 3.56%.

Article by Contingent Macro Advisors