Mortgage Applications Drop but Activity Remains Strong

Mortgage Interest Rates Drop

Total mortgage applications were down this week, even as mortgage rates held steady near record lows. 

Overall applications dropped 2.5%, while refinances dipped 4%, and purchase loan activity fell 12%. Meanwhile, rates on 30-year, fixed-rate loans stayed put at 3.07%. 

It’s not all bad news, though. According to Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association (MBA), application numbers are still strong compared to 2019.

“A 5% decline in conventional refinances pulled the overall index lower, but activity was still 30% higher than last year,” he said. “With the flurry of refinance activity reported over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizeable drop in rates.”

Purchase loans are also going strong if you look at the bigger picture. Applications to buy a home have been up over last year’s numbers for the last 17 weeks. Buyers are also taking out larger loans, with the average loan size clocking in at $370,200 — a new high for MBA’s weekly survey.

More in Mortgage and Housing News

  • Data from MBA shows that applications to buy a new construction home were up 33.3% in August. It was the second strongest month for new home sales this year. 
  • The share of mortgage loans in forbearance fell to 7.01% this week, according to MBA. About 3.5 million homeowners are still on a forbearance plan.
  • Overall mortgage credit availability fell by 4.7% in August, indicating lenders are tightening their qualifying standards. Credit availability fell most on jumbo loans (down 8.9%) and conventional loans (8.7%). 
  • Fannie Mae released its latest housing forecast, and the news is good for the mortgage industry. According to the GSE, lending will reach a total volume of $3.87 trillion this year — the highest level on record.

This Week in Mortgage Rates

Rates more or less held steady across all loan types this week, with the exception of 5/1 ARMs, which saw quite an increase.

Here’s how rates shook out across loan types:

  • All 30-year, fixed-rate loans: 3.07%, 0.32 points
  • Jumbo 30-year, fixed-rate loans: 3.41%, 0.27 points
  • FHA 30-year, fixed-rate loans: 3.16%, 0.35 points
  • 15-year, fixed-rate loans: 2.61%, 0.35 points
  • 5/1 ARMs: 3.20%, 0.58 points

Check back here next week for the latest mortgage rates.

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By Aly Yale / September 18th, 2020 / Categories: , / Tags:

Aly Yale

Aly J. Yale is a mortgage and real estate writer based in Houston. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.