Mortgage Apps: Continued Declines

Bottom Line:  Mortgage applications fell further last week, with the Mortgage Banker's Association's index hitting a new cycle low. While secondary market spreads to Treasuries have held about 10-15bps tighter since early August, mortgage bankers have yet to pass along the lower rates to borrowers as the average 30-year fixed rate held near 6%. Overall, the trend in mortgage applications suggests that the slowdown in housing has continued through July. It appears that purchase application volume will fall below the levels seen from 2017-19, following changes in the tax code that limited mortgage interest deduction.

The MBA Mortgage Application Index FELL -1.8% to 276.0, BELOW the 13-week average of 312.0 and -63.1% BELOW the year-ago level. Non-seasonally adjusted the index FELL slightly , DOWN -1.5%.The Purchase Index FELL slightly , DOWN -0.8% to 206.0, BELOW the 13-week average of 228.0 and -18.1% BELOW the year-ago level.The Refinancing Index FELL -3.7% to 631.0, BELOW the 13-week average of 750.0 and -82.6% BELOW the year-ago level.The effective (adjusted for points paid) 30-year mortgage rate FELL -8bps to 5.92%, ABOVE the 13-week average of 5.81% and 90bps ABOVE the year-ago level.Current coupon yields in the secondary market were down -22.0 bps last week , closing at 4.16%, and were up 8.0 bps this week through Tuesday.