Mortgage application activity continues to shrink: MBA

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Mortgage applications decreased 0.1% from one week earlier, dropping for the seventh time in eight weeks even with scant movement in interest rates, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Aug. 31 found that the refinance index decreased 1% from the previous week. The refinance share of application activity increased to 38.9% from 38.7% the previous week.

"Mortgage application volume was little changed as mortgage rates remain within the narrow range they have been in the past several months," MBA Chief Economist Mike Fratantoni said in a press release.

"The job market remains quite strong, supporting purchase demand, which is 2% higher than last year at this time. However, home prices, while decelerating, continue to rise faster than household income. Average loan size for purchase loans dropped to its lowest level since December 2017, a sign that first-time buyers are finding a way into the market."

The seasonally adjusted purchase index increased 1% from one week earlier, while the unadjusted purchase index decreased 2% compared with the previous week and was 2% higher than the same week one year ago.

Adjustable-rate loan activity decreased to 6.1% from 6.5% of total applications, while the share of Federal Housing Administration-guaranteed loans remained unchanged at 10.2% from the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 10% from 10.5% and the U.S. Department of Agriculture/Rural Development share increased to 0.8% from 0.7% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 2 basis points to 4.8%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 1 basis point to 4.67%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 2 basis points to 4.79%, while for 15-year fixed-rate mortgages the average decreased 1 basis point to 4.23%.

The average contract interest rate for 5/1 ARMs increased to 4.09% from 3.95%.