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Mortgage Apps: Purchase Apps Continue Slide

February 1, 2017

Bottom Line: Seasonal adjustments around the MLK holiday continued to impact MBA application data in the week ended January 27th as purchase applications gave back some of last week's gains. But with mortgage rates roughly unchanged in January versus December, the trend in purchase applications remains robust with the 4-week average holding near the highs of the last 5 years. Refinancing applications are a different story as the 4-week average is now at the lowest level seen since 2008 as the increase in mortgage rates (from 3.50-3.75% prior to the election to 4.25-4.50% in the last two months) has made refinancing unattractive for most borrowers.

The MBA Mortgage Applications Index FELL by 3.2% during the week ended January 27 to 384.7, modestly below its 13 week average of 405.6 and 16.5% BELOW its year ago level.

The Purchase Index FELL by 5.6% to 229.6, slightly above its 13 week average of 228.6 and 3.8% 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 FELL by 1.4% to 1,248. With this decline, refinancing activity is sharply below its 13 week average of 1,430 and 31.7% BELOW its year ago level.

Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 4 bps to 4.39% and with the 15-year fixed rate increasing by 4 bps to 3.61%.

Article by Contingent Macro Advisors