Mortgage Applications Plunge as Interest Rates Rise

October 19, 2011 (Chris Moore)

Mortgage applications for home purchases dropped to their lowest level in 15 years while rising interest rates dramatically slowed refinance applications according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 14, 2011.

The Market Composite Index, a measure of mortgage loan application volume, which includes purchase applications and refinance applications, decreased a seasonally adjusted 14.9 percent from the previous week.

On an unadjusted basis, the Index decreased 14.9 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is down 2.36 percent.

Purchase Applications:

The seasonally adjusted Purchase Index decreased 8.8 percent from the previous week and is at its lowest level since December 1996. The four week moving average is down 1.53 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 8.6 percent compared with the previous week and was 5.1 percent lower than the same week a year ago.

Purchase activity declined for both conventional and government loans with the Conventional Purchase Index declining 11.0 percent and the Government Purchase Index declining 5.9 percent from the previous week.

Refinance Activity:

The Refinance Index decreased 16.6 percent from the previous week while the four week moving average for the Index is down 2.58 percent.

The refinance share of mortgage activity declined to 77.6 percent of total applications from 79.1 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)

4.33

4.25

0.48

0.47

Increased

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

4.64

4.59

0.45

0.49

Increased

15-Year FRM

3.61

3.53

0.43

0.45

Increased

FHA 30-Year

4.12

4.06

0.53

0.58

Increased

5/1 ARM

3.08

3.03

0.48

0.54

Increased

The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent of total applications from 6.0 percent the previous week.

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