Even Lower Interest Rates Keep Refi’s Rolling

May 17, 2012 (Chris Moore)

Applications to refinance mortgages increased for the third consecutive week as mortgage interest rates continued to decline into new record low territory brought on by the European debt crisis which has pushed Treasury bonds near their record low according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 18th, 2012.

The Market Composite Index, a measure of mortgage loan application volume including purchase applications and refinance applications, increased a seasonally adjusted 3.8 percent from the previous week.

On an unadjusted basis, the Index increased 3.3 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.72 percent.

Michael Fratantoni, MBA’s Vice President of Research and Economics, stated, “Continuing negative developments in the sovereign debt crisis in Europe, particularly in Greece and Spain, as well as the recent French elections, which have shifted political power in a manner that will likely show less support for European austerity, helped push the US 10 Year Treasury yield below 1.7 percent last week. Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market. As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year. The HARP share of refinance applications was essentially unchanged over the week at 28 percent, so it was not the primary driver of the increase over the previous week.”

Purchase Applications:

The seasonally adjusted Purchase Index decreased 3.0 percent from the previous week. The four week moving average is up 0.17 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 3.6 percent compared with the previous week and was 4.2 percent lower than the same week a year ago.

Refinance Applications:

The Refinance Index increased 5.6 percent from the previous week. The four week moving average for the Refinance Index is up 4.83 percent.

The refinance share of mortgage activity increased to 76.6 percent of total applications from 74.9 percent the previous week.

Mortgage Interest Rates:

Average Contract Mortgages Rates
(80% loan-to-value)

Type of
Loan

Interest Rate (%)

Points

Effective Rate

Current

Previous

Current

Previous

30-Year FRM Conforming
($417,500 or less)

3.93*

3.96

0.37

0.39

Decreased

30-Year FRM Non-Conforming
($417,501 or more)

4.25

4.20*

0.42

0.36

Increased

15-Year FRM

3.26*

3.26*

0.42

0.41

Decreased

FHA 30-Year

3.73*

3.75

0.66

0.57

Decreased

5/1 ARM

2.83

2.80

0.42

0.37

Increased

*Record Survey Low

The adjustable-rate mortgage (ARM) share of activity decreased to 5.0 percent from 5.0 percent the previous week.

Tags: MBA, home purchase applications, mortgage rates, fixed rate mortgage, adjustable rate mortgage, refinance, interest rate

Sources:
Mortgage Bankers Association