Mortgage applications decrease even as interest rates fall

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Mortgage applications decreased 4.3% from one week earlier although concerns over the global economy resulted in falling interest rates, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending April 26 found that the refinance index decreased 5% from the previous week. The seasonally adjusted purchase index decreased 4% from one week earlier, while the unadjusted purchase index decreased 3% compared with the previous week and was 1% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 38.8% of total applications from 39.4% the previous week.

"Mortgage rates were lower last week — with the 30-year fixed rate declining to 4.42% — as concerns over global growth, particularly in Germany, outweighed more positive domestic news on first quarter GDP growth and business investment," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Applications to refinance and purchase a home both fell, but purchase activity still remained slightly above year ago levels. The drop in refinances were driven by fewer FHA and VA loan applications, which typically lag the movement of conventional loans."

The adjustable-rate mortgage share of applications decreased to 6.2% from 6.4%, its lowest share since August 2018, said Kan. "So far in 2019, we continue to see a preference for 7/1 ARMs, which account for around 36% of all ARM applications, followed by 10/1 and 5/1 ARMs. This is another indication that the few borrowers who choose to apply for ARM loans are electing to reap the benefit of lower rates, as well as some rate stability."

The share of Federal Housing Administration-insured loan applications decreased to 9.5% from 9.9%, while those for Veterans Affairs-guaranteed loans decreased to 10.9% from 11.3%. The U.S. Department of Agriculture/Rural Development share remained unchanged from the week prior at 0.6%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 4 basis points to 4.42%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 4 basis points to 4.31%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 10 basis points to 4.39%. For 15-year fixed-rate mortgages, the average decreased 6 basis points to 3.81%, while the average contract interest rate for 5/1 ARMs decreased to 3.81% from 3.92%.