Shutdown May Have Contributed to Sharp Drop in Mortgage Applications

Mortgage application volume fell nearly 10% during the final two weeks of 2018, despite the fact that mortgage rates continued to fall.

According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, total application volume decreased 9.8% on a seasonally adjusted basis during the two-week period ended December 28.

Applications for refinances fell 12% while applications for purchases decreased 8%.

On an unadjusted basis, total volume decreased 46%. Applications for purchases decreased 46% on an unadjusted basis and were down 6% compared with the same two-week period one year earlier.

The average rate for a 30-year fixed-rate mortgage fell to 4.84%, down from 4.86%.

“Mortgage applications fell over the past two weeks – even as the 30-year fixed-rate mortgage decreased to 4.84 percent, its lowest since September 2018,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Investors continued to show a preference for safer U.S. Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower.

“Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped,” he adds. “Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA application processing times likely contributed to the weakness in activity.” 

The refinance share of mortgage activity fell to 42.7% of total applications.

The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.6%.

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