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Mortgage Apps: Refis Higher As Purchase Activity Slows

February 12, 2020

Bottom Line: Mortgage applications rose in the first week of February, driven entirely by continued strength in refinancing as 30-year fixed-rate mortgage rates averaged below 3.75% for the second straight week. Purchase applications were slower for the third week in the last four. That said, the 4-week moving average of the purchase index is still 6% above the 13-week average. The share of adjustable-rate mortgages continued to rise, a notable development this year. Overall, purchase applications suggest the uptrend in existing home sales that re-started in mid-2019 can continue. Meanwhile, the uptick in refinancing applications suggests homeowners will have greater free cash flow to use for consumption and savings.

The MBA Mortgage Applications Index ROSE by 1.1% during the week ended February 7 to 689.5, sharply above its 13 week average of 559.7 and 95.5% ABOVE its year-ago level.

The Purchase Index FELL by 5.8% to 267.4, modestly below its 13 week average of 274.9 but 16.8% ABOVE its year-ago level.

The Refinance Index ROSE by 5.0% to 3,124. Despite this increase, refinancing activity is sharply above its 13 week average of 2,225 and 206.5% ABOVE its year-ago level.

Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 1 bp to 3.72% and the 15-year fixed rate increasing by 1 bp to 3.20%.

Article by Contingent Macro Advisors