Mortgage Apps: Muted Response To Lower Rates

January 9, 2019
Bottom Line: The 30-year mortgage rate is now down 43bps in the last 2 months, moving from 5.17% to 4.74% most recently. While the correlation with rates on the way up was quite negative (applications fell sharply in response to higher rates), applications have picked up a bit less than one might have expected in the last four weeks. The four-week moving average of the purchase index was just 1% above the 13-week average as 2019 got started. Overall mortgage application is very weak with little refinancing activity and growth in purchase applications stagnant. The MBA Mortgage Applications Index ROSE by 23.5% during the week ended January 4 to 362.7, sharply above its 13 week average of 328.7 but 7.0% BELOW its year ago level. The Purchase Index ROSE by 16.5% to 255.2, moderately above its 13 week average of 235.0 and 5.2% ABOVE its year ago level. The Refinance Index ROSE by 35.3% to 988. Despite this increase, refinancing activity is sharply above its 13 week average of 843 but 21.5% BELOW its year ago level. Contract Mortgage Rates FELL with the 30-year fixed rate declining by 10 bps to 4.74% and with the 15-year fixed rate declining by 9 bps to 4.16%.