Mortgage Applications Today: New Home Loans and Refinancing Slows Despite Lower Rates for Now

Mortgage applications decreased 1.9% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA). It's an about-face from the week prior, when home loans saw a 7.1% increase.

This comes as mortgage interest rates dipped to 6.17% for the week ending Oct. 30, according to Freddie Mac. That's the fourth-straight week of declines after the Federal Reserve cut interest rates for the second time this year.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.9% on a seasonally adjusted basis from one week earlier.

On an unadjusted basis, the Index decreased 3% compared with the previous week. The Refinance Index decreased 3% from the previous week and was 151% higher than the same week one year ago.

The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 26% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 57.0% of total applications from 57.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.7% of total applications.

The FHA share of total applications decreased to 18.5% from 20.5% the week prior. The VA share of total applications increased to 14.9% from 13.4% the week prior. The USDA share of total applications increased to 0.3% from 0.2% the week prior.

“Mortgage rate movements were mixed last week as Treasury yields moved slightly higher following last week’s FOMC meeting. The 30-year fixed rate was mostly unchanged at 6.31 percent and remained close to the lowest level in over a year,” said Joel Kan, MBA’s vice president and deputy chief economist.

"Despite a decline last week, refinance applications are still significantly higher than a year ago. The average loan size for refinance applications was at its highest level in six weeks, as borrowers with larger loans continued to seek ways to lower their monthly payments."

Contract rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.31% from 6.30%, with points remaining unchanged at 0.58 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) increased to 6.43% from 6.38% with points decreasing to 0.33 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.13% from 6.12%, with points remaining unchanged at 0.73 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.65% from 5.67%, with points remaining unchanged at 0.61 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable rate mortgage (ARMs) decreased to 5.56% from 5.66%, with points increasing to 0.86 from 0.51 for (including the origination fee) for 80% LTV loans.

Mortgage rates calculated

Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.

The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.

The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.