Fannie Mae Data Show Purchase Application Dollars Jump 15.2% in a Week

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Mortgage demand looks very different depending on which slice of the market is being measured.

Fannie Mae’s latest weekly mortgage applications data show purchase application dollar volume rose 15.2% for the week ending Sept. 18. Total refinance application dollar volume increased 8.9%, including a 12.7% gain in cash-out refinance volume and a 1.6% increase in rate-term refinance volume.

The weekly gains come with an important counterweight. Compared with a year earlier, Fannie Mae’s purchase index was down 9%, total refinance dollar volume was down 68.9%, rate-term refinance volume was down 86.8% and cash-out refinance volume was down 19.2%.

Why this does not contradict MBA’s weekly report

The numbers arrive the same morning that the Mortgage Bankers Association reported a 1.5% decline in its Market Composite Index for the week ending Sept. 18 as the average contract rate on conforming 30-year fixed mortgages climbed to 7.12%.

Those results should not be treated as competing measurements of exactly the same thing.

Fannie Mae’s Purchase Application-Level Index and Refinance Application-Level Index are built from mortgage applications submitted through Fannie Mae’s Desktop Underwriter automated underwriting system. The figures cited here measure changes in dollar volume.

MBA’s Weekly Mortgage Applications Survey is a separate survey-based measure of application activity across participating mortgage bankers, commercial banks and thrifts. Differences in coverage, methodology and what is being indexed can produce different week-to-week readings.

For housing and mortgage professionals, that distinction is the story.

A weekly bounce inside a much weaker annual picture

Fannie’s 15.2% weekly purchase-dollar increase is substantial, but the 9% year-over-year decline shows why one week should not be mistaken for a broad recovery in purchase lending.

The refinance comparison is even more severe. Total refinance dollar volume was nearly 69% below the same week a year earlier, while rate-term refinance volume was down almost 87%.

Cash-out activity has held up better than rate-term refinancing, but it too remained below last year’s level.

That mix is consistent with a market in which higher mortgage rates have sharply reduced the pool of borrowers who can lower their rate through a refinance. Homeowners with substantial accumulated equity can still have reasons to tap that equity even when prevailing mortgage rates are unattractive.

What professionals should watch

Fannie Mae releases the PALI and RALI readings weekly, generally on the second business day of the week. Because the indices are based on DU application data, they offer a timely window into a major segment of conventional mortgage activity.

No single weekly index is a complete picture of U.S. mortgage demand. The useful signal comes from following the direction of multiple measures over time and understanding what each one actually captures.

This week’s Fannie Mae reading says purchase application dollars rebounded sharply from the prior week. The year-over-year comparison says the market remains materially below where it stood a year ago.

Both can be true at the same time.