Mortgage Applications Shrink As Va Loan Demand Declines

Mortgage applications decreased 1.4% from one week earlier, according to data from the Mortgage Bankers Association (MBA)’s weekly mortgage applications survey for the week ending Aug. 15.

Without taking seasonal adjustments into account, the index decreased 2% compared with the previous week.

The refinance index decreased 3% from the previous week but was 23% higher than the same week one year ago. The refinance share of mortgage activity decreased to 46.1% of total applications, down from 46.5% the previous week.

The seasonally adjusted purchase index increased 0.1% from one week earlier. The unadjusted purchase index decreased 2% compared with the previous week and was 23% higher than the same week a year ago.

“Mortgage rates increased slightly last week, with the 30-year fixed rate now at 6.68%. Applications were down as a result, driven by a 16% decrease in VA applications, which are a typically volatile segment of the market,” said Joel Kan, MBA’s vice president and deputy chief economist.

By product, the adjustable-rate mortgage (ARM) share of activity decreased to 8.6% of total applications. The Federal Housing Administration (FHA) share of applications increased to 19.1%, up from 18.4% the week prior, while the U.S. Department of Veterans Affairs (VA) share of applications decreased from 14.2% to 13.4%. The U.S. Department of Agriculture (USDA) share of applications increased from 0.5% to 0.6% during the week.

“FHA refinance applications increased over the week, as the FHA rate, at 6.39%, remained competitive relative to other loan types,” Kan added. “Purchase applications were little changed over the week but were at the strongest pace in four weeks and continued to run well ahead of last year’s pace. Prospective homebuyers remain more active compared to last year despite economic headwinds and uncertainty and affordability challenges.”

The average contract interest rate for 30-year fixed-rate mortgages increased by 1 basis point to 6.68%. Jumbo mortgage rates, however, dropped 6 bps to 6.64%.

The average contract interest rate for 30-year fixed mortgages backed by the FHA decreased to 6.39% while rates for 15-year mortgages increased to 5.96%. The average contract interest rate for 5/1 ARMs added 21 bps during the week to finish at 6.01%.