U.S. mortgage applications fell to their lowest levels in six weeks even as home borrowing costs turned cheaper as a result of lower bond yields, the Mortgage Bankers Association said on Wednesday.
The Washington-based group’s seasonally adjusted index on mortgage activity to buy a home and to refinance one declined 4.3% to 407.2 in week ended April 26, which was the lowest reading since 390.0 in the week of March 15.
"Mortgage rates were lower last week, with the 30-year fixed rate declining to 4.42 percent, as concerns over global growth, particularly in Germany, outweighed more positive domestic news on first quarter GDP growth and business investment," said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.
"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."
Kan noted the adjustable-rate mortgage share of applications decreased to 6.2 percent, its lowest share since August 2018. "So far in 2019, we continue to see a preference for 7/1 ARMs, which account for around 36 percent of all ARM applications, followed by 10/1 and 5/1 ARMs," he said. "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."
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.42 percent from 4.46 percent, with points increasing to 0.46 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.81 percent from 3.87 percent, with points decreasing to 0.40 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
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