Only one week after new applications for home loans surged just before the implementation of the new Integrated Disclosure Rule, mortgage applications gave back all their gains.
A seasonally adjusted 28 percent drop from seven days previous was reported for the Market Composite Index for the week ended Oct. 9. The index is a measure of mortgage loan application volume.
The sharp decline followed a week when
new activity surged 26 percent as originators rushed to avoid being subject to new disclosures required under the Truth in Lending Act and Real Estate Settlement Procedures Act.
The Mortgage Bankers Association, which reported the index in its
Weekly Mortgage Applications Survey Wednesday, noted that the slowdown in the latest report reflects new TRID requirements.
“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,” MBA Chief Economist Mike Fratantoni said in the report. “The prior week’s results evidently pulled forward much of the volume that would have more naturally taken place into this week.”
Another factor not mentioned by the association was Columbus Day, as new activity tends to slow ahead of a Monday holiday.
The index declined 27 percent on an unadjusted basis.
Leading the
tumble were applications for purchase financing, which sank by more than a third on a seasonally adjusted basis from the last report. But purchase business was off by just one percent compared to the same week last year on an unadjusted basis.
Refinance applications retreated 23 percent on a seasonally adjusted basis from the week ended Oct. 2.
Refinance share was 61.2 percent in the latest report, widening from 57.4 percent one week earlier.
Adjustable-rate mortgages accounted for 7.5 percent of all applications. ARM share was slightly more narrow than 7.6 percent the previous week.
The trade group said that Federal Housing Administration applications made up 12.6 percent of all applications, off from 12.7 percent in the last report.
Applications for loans guaranteed by the Department of Veterans Affairs represented 11.5 percent of all activity in the most-recent report, climbing from 9.2 percent.
Interest rates on jumbo mortgages were 10 basis points less than on conforming loans. The jumbo-conforming spread was no different than in the last report.
The spread between 15- and 30-year mortgages widened to
79 BPS from 75 BPS a week earlier.
