Mortgage application activity slowed for the week ending Feb. 6, according to data from the Mortgage Bankers Association (MBA).
The Market Composite Index, the MBA’s measure of mortgage loan application volume, dipped by 0.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index was up by 2% compared with the previous week.
The seasonally adjusted Purchase Index decreased 2% from one week earlier while the unadjusted index increased 4% compared to both the previous week and the same week one year ago. The Refinance Index inched up by 1% from the previous week and was 101% higher than the same week one year ago. The refinance share of mortgage activity decreased to 56.4% of total applications from 57.1% in the previous week.
Among the federal programs, the FHA share of total applications increased to 18.4% from 17.8% the week prior and the VA share of total applications increased to 16.0% from 15.8% while the USDA share of total applications remained unchanged at 0.4%.
Joel Kan, MBA’s vice president and deputy chief economist, observed, “FHA purchase and refinance applications increased, helped partially by the FHA rate declining and remaining 20 basis points lower than the conforming 30-year fixed rate. Borrowers are increasingly utilizing FHA loans as affordability challenges remain, despite recent improvements. Similarly, the ARM share increased to a seven-week high with ARM rates almost a percentage point lower than fixed rates.”
The MBA also reported mortgage credit availability increased in January according to its Mortgage Credit Availability Index (MCAI), which rose by 1.1% to 105.9 in January. The index was benchmarked to 100 in March 2012.
The Conventional MCAI increased 2.1% and the Government MCAI has a 0.1% uptick. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 2.9% and the Conforming MCAI remained unchanged.
“Mortgage credit availability increased in January, as lenders broadened their offerings of ARM loans, cash out refinances, and loans on second homes. Most of these require lower LTV and higher credit scores,” Kan. “The beginning of the year is typically when lenders start to position themselves for the spring homebuying pick up, and recent dips in mortgage rates have provided windows of refinance opportunities, including refinances into ARM loans. Jumbo credit availability expanded almost 3% over the month, with the growth in supply of both jumbo and non-QM loan programs.”
