Mortgage Applications Plummet Causing Banks To Scramble To Lower Interest Rates

Mortgage applications continue to decline according to the Mortgage Bankers Association. Is this a sign Americans are losing faith in the lending industry?

The MBA stated that mortgage applications fell another 2.9% for the week ending May 18, 2018. This is the lowest it has fallen since December of 2000.

On an unadjusted basis, the index decreased 4% from the previous week.

The Refinance Index also dropped. The RI fell 5% from the previous week. This is also the lowest since December 2000.

The unadjusted Purchase Index also decreased. The PI fell 3% from last week. The seasonally adjusted Purchase Index dropped 2% from last week. However, this is still 2% higher from this time last year.

The refinance share of mortgage activity also fell .5%.  Mortgage applications for refinances decreased from last week’s 35.7% to 35.3%. This is the lowest level since August 2008.

Additionally, Mortgage applications for adjustable-rate mortgages decreased to 6.7% of total applications.

Mortgage applications for FHA loans decreased from the 10.3% the prior week to 9.9%. Yet, applications for VA loans increased from 9.8% last week to 9.9%.

Bankers Try To Stop The Decline In Mortgage Applications By Lowering Rates. But Is it Working?

The MBA reported mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased from last week’s 4.86% to 4.84%.

Yet, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) only decreased from 4.81% last week to 4.73%.

The contract interest rate for 30-year fixed-rate FHA mortgages only decreased from last week’s 4.9% to 4.85% this week.

Interest rates for 15-year fixed-rate mortgages decreased from last week’s average of 4.31% to 4.24% this week.

Furthermore, the average contract interest rate for 5/1 ARMs was essentially unchanged. It only dropped 4.11% from 4.12% last week.