Mortgage Applications in U.S. Dip in Late October

According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending October 26, 2018, U.S. mortgage applications decreased 2.5 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week.

The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 0.4 percent lower than the same week one year ago.

"The 30-year fixed-rate mortgage held steady over the week, but total applications decreased overall. Purchase applications inched backward from the previous week, as well as compared to one year ago - the first year-over-year decline in purchase activity since August," said Joel Kan, AVP of industry surveys and forecasts. "Purchase applications may have been adversely impacted by the recent uptick in rates and the significant stock market volatility we have seen the past couple of weeks. Additionally, the ARM share of applications increased to its highest level since 2017, but since this is a compositional measure, it was driven by a greater decrease in applications for fixed-term loans relative to the decrease in ARM applications."

The refinance share of mortgage activity decreased to 39.4 percent of total applications from 39.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.6 percent of total applications, the highest level since May 2017.

The FHA share of total applications increased to 10.3 percent from 10.1 percent the week prior. The VA share of total applications decreased to 9.8 percent from 10.1 percent the week prior. The USDA share of total applications remained unchanged at 0.7 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 5.11 percent, with points decreasing to 0.50 from 0.52 (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 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.94 percent from 5.01 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 5.08 percent from 5.07 percent, with points increasing to 0.62 from 0.61 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.55 percent from 4.50 percent, with points decreasing to 0.51 from 0.55 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 4.33 percent from 4.47 percent, with points increasing to 0.42 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.