Mortgage Apps: Sharp Decline As Rates Inch Back Over 4%

Bottom Line: As the average 30-year fixed-rate moved back over 4% last week, mortgage applications slowed sharply. There appears to be a trigger for refinancing that is more pronounced than in previous cycles. And as mortgage bankers refinanced higher rates first (very fast mortgage prepayment speeds last month confirmed this), the trigger rate is inching lower for aggregate refinancing activity. That trigger is 4% now, down from 4.125% a month ago. On a trend basis refinancings are still up sharply since the broad decline in rates started at the end of 2018. Purchase applications are mixed, despite the low overall rate level. Still higher than year-ago levels, the purchase application index is above 4% below its 13-week average, suggesting a modest slowdown in activity. The MBA Mortgage Applications Index FELL by 11.9% during the week ended October 18 to 515.9, moderately below its 13 week average of 557.9 but 52.7% ABOVE its year ago level. The Purchase Index FELL by 3.6% to 241.7, modestly below its 13 week average of 252.0 but 5.8% ABOVE its year ago level. The Refinance Index FELL by 17.1% to 2,077. With this decline, refinancing activity is moderately below its 13 week average of 2,307 but 125.8% ABOVE its year ago level. Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 10 bps to 4.02% and with the 15-year fixed rate increasing by 7 bps to 3.39%.