by Bill McBride on 10/14/2015 07:01:00 AM
Wednesday, October 14, 2015
Last week I noted that the surge was related to applications being filed before the TILA-RESPA regulatory change, and that I expected applications to decline significant in the survey this week since demand was pulled forward. So the decline is not a surprise - just a reverse of the previous week.
From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey
Mortgage applications decreased 27.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 9, 2015.Click on graph for larger image.
The Refinance Index decreased 23 percent from the previous week. The seasonally adjusted Purchase Index decreased 34 percent from one week earlier. The unadjusted Purchase Index decreased 34 percent compared with the previous week and was 1 percent lower than the same week one year ago.
“Application volume plummeted last week in the wake of the implementation of the new TILA-RESPA integrated disclosures, which caused lenders to significantly revamp their business processes, and as a result dramatically slowed the pace of activity. The prior week’s results evidently pulled forward much of the volume that would have more naturally taken place into this week. Purchase volume for the week was below last year’s pace, the first year over year decrease since February 2015, while refinance volume dropped sharply even with little change in mortgage rates,” said Mike Fratantoni, MBA’s Chief Economist.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 3.99 percent, with points increasing to 0.53 from 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The first graph shows the refinance index.
Refinance activity remains low.
This week was just the reverse of last week.
2014 was the lowest year for refinance activity since year 2000, and refinance activity will probably stay low for the rest of 2015 (after the increase earlier this year).
The second graph shows the MBA mortgage purchase index.
According to the MBA, the unadjusted purchase index is 1% lower than a year ago.
The surge last week was related to applications being filed before the TILA-RESPA regulatory change, and the decline this week was the inverse. The wild swings should resolve fairly quickly.