Mortgage application volume fell 27.6% on an adjusted basis during the week ended Oct. 9, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
The dramatic decrease is due to the fact that the previous week saw an artificial spike in application volume resulting from lenders trying to push through as many applications as possible ahead of the implementation of the Consumer Financial Protection Bureau's (CFPB) new TILA-RESPA Integrated Disclosures rule on Oct. 3. As a result, volume last week was way down compared to the previous week.
On an unadjusted basis, volume decreased about 27%.
Applications for refinances decreased 23% while applications for purchases were down 34%.
On an unadjusted basis, applications for purchases decreased 34% compared with the previous week and were 1% lower compared to 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,’ explains Mike Fratantoni, chief economist for the MBA, in a release. ‘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.’
The refinance share of mortgage activity increased to 61.2% of total applications from 57.4% the previous week.
Fixed mortgage rates continued stay more or less flat: The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 3.99%, unchanged from the previous week.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 3.89%, also unchanged from the previous week.
The average rate for a 30-year FRM backed by the Federal Housing Administration (FHA) was 3.82%, up from 3.80%.
The average rate for a 15-year FRM was 3.20%, down from 3.24%.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 3.00%, up from 2.96%.
The ARM share of activity decreased to 7.5% of total applications.
Looking at application volume by loan type, the FHA's share of total applications was 12.6%, down from 12.7% the week prior. The Veterans Affairs' share of total applications was 11.5%, up from 9.2% the week prior. The U.S. Department of Agriculture's share of total applications was 0.5%, down from 0.7% the previous week.
All rates are based on closings. The survey covers about 75% of the total residential mortgage market.