Despite an easing in mortgage rates, the number of new home loan applications continued to decline last week, according to the Mortgage Bankers Association’s latest survey.
The market composite index — a measure of total home loan volume — was down 4 percent last week on a seasonally adjusted basis from the week before. The index that tracks refinancings fell 4.2 percent during the period, and the purchase loan index dropped 4 percent.
Borrowing costs on long-term loans sank considerably, with the average contract interest rate on the 30-year fixed-rate mortgage declining to 6.41 percent from 6.49 percent and the 15-year fixed rate slipping to 6.1 percent from 6.2 percent. The average rate on the one-year adjustable-rate mortgage (ARM), however, soared to 6.51 percent from 5.84 percent a week earlier.
Points, which are loan-processing fees expressed as a percent of the total loan amount, averaged 1.48 on the 30-year loans, 1.19 on the 15-year, and 1 on one-year ARMs. These points include the origination fee and are based on loan-to-value ratios of 80 percent.
According to MBA, the refinance share of mortgage activity increased to 40.4 percent of total applications from 39.9 percent the previous week, while the ARM share tumbled from 18.6 percent to 15 percent.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.