Mortgage Applications Increase as Interest Rates Slide Downward

August 3, 2011 (Chris Moore)

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 29, 2011. The Market Composite Index, a measure of mortgage loan application volume increased 7.1 percent but overall activity remains weak compared to historic standards and refinance activity is still 30 percent below last year’s levels.

On an unadjusted basis, the Index increased 7.0 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.8 percent.

Purchase Applications:

The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The four week moving average is down 0.4 percent for the seasonally adjusted Purchase Index.

The unadjusted Purchase Index increased 5.2 percent compared with the previous week, and is 5.9 percent higher than the same week one year ago.

Refinance Activity:

The Refinance Index increased 7.8 percent from the previous week. The four week moving average is up 4.2 percent. Refinance activity is still almost 30 percent below last year’s level.

The refinance share of mortgage activity increased to 70.1 percent of total applications from 69.6 percent last week.

Mortgage Interest Rates:

30-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 4.45 percent from 4.57 percent last week, with points decreasing to 0.78 from 1.14 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week. Thirty year rates are at their lowest since the beginning of November 2010.

15-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 3.52 percent from 3.67 percent last week, with points decreasing to 1.02 from 1.08 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. Fifteen year rates are at the lowest levels since the survey began in 1990.

ARMs:

The adjustable-rate mortgage (ARM) share of activity increased to 6.6 percent from 6.1 percent the previous week.

“Treasury rates plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Mortgage rates fell, with the rate on 15-year mortgages reaching a new low in our survey. Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year’s level. Factors such as negative equity and a weak job market continue to constrain borrowers. Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards.”

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

Sources:
MBA