Low Rates Fuel Big Jump in Mortgage Applications

January 18, 2012 (Chris Moore)

Mortgage applications for both purchases and refinances made a big jump this week as fixed mortgage rates dropped to their lowest level in survey history according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2012.

The Market Composite Index, a measure of mortgage loan application volume which includes purchase applications and refinance applications, increased a seasonally adjusted 23.1 percent from the previous week. The results from last week’s report included an adjustment for the New Year’s holiday.

On an unadjusted basis, the Index increased 38.1 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is up 5.99 percent.

“Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe,” said Michael Fratantoni, MBA’s vice president of research and economics. “With mortgage rates reaching new lows, refinance volume jumped and MBA’s refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season.”

Purchase Applications:

The seasonally adjusted Purchase Index increased 10.3 percent from the previous week. The four week moving average is up 1.96 percent for the adjusted Purchase Index.

The unadjusted Purchase Index increased 28.4 percent compared with the previous week and was 2.2 percent higher than the same week a year ago.

Refinance Applications:

The Refinance Index increased 26.4 percent from the previous week. The four week moving average for the Index is up 7.00 percent. Refinance activity was at its highest level since August of last year.

The refinance share of mortgage activity increased to 82.2 percent of total applications from 80.8 percent the previous week, the highest share of refinance activity since October of 2010.

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)

4.06*

4.11

0.48

0.41

Decreased

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

4.40

4.34*

0.37

0.47

Increased

15-Year FRM

3.33

3.39

0.37

0.37

Decreased

FHA 30-Year

3.91*

3.96

0.59

0.72

Decreased

5/1 ARM

2.90

2.90

0.45

0.49

Decreased

*Survey record low

The adjustable-rate mortgage (ARM) share of activity increased to 5.6 percent of total applications from 5.4 percent the previous week.

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

Sources:
Mortgage Bankers Association