Mortgage Applications Continue to Decline During the Holidays

January 4, 2012 (Chris Moore)

Mortgage applications continued to decline during the Christmas holiday as purchase applications tumbled while the refinance share of applications was at its highest level in 2011 according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 30, 2011.

This week’s report covers a two week period from December 16th through December 30th and includes adjustments for the Christmas Holiday.

The Market Composite Index, a measure of mortgage loan application volume which includes purchase applications and refinance applications, decreased a seasonally adjusted 3.7 percent during the two week reporting period.

“Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity. Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011. As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase. Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

Purchase Applications:

The seasonally adjusted Purchase Index decreased 9.7 percent during the two week reporting period.

Refinance Applications:

The Refinance Index decreased 1.9 percent in the last two weeks while the refinance share of mortgage activity has increased to 81.9 percent of total applications from 80.7 percent since December 16th.

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)

4.07*

4.08

0.53

0.49

Decreased

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

4.41*

4.44

0.44

0.37

Decreased

15-Year FRM

3.37*

3.39

0.50

0.40

Decreased

FHA 30-Year

3.96

3.93

0.71

0.63

Increased

5/1 ARM

2.91

2.90

0.48

0.46

Increased

* Yearly low

This week’s results are based on an enhanced sample which captures more than 75% of all retail and consumer direct channel mortgage applications, compared to 50% previously.

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

Sources:
Mortgage Bankers Association