Mortgage Applications Rise, Borrowers Try to Beat FHA Fee Increase

April 4, 2012 (Chris Moore)

Mortgage application volume increased last week as applications for government loans jumped by more than 10 percent, likely due to borrowers trying to beat the scheduled fee increases on FHA mortgages according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 30, 2012.

The Market Composite Index, a measure of mortgage loan application volume which includes purchase applications and refinance applications, increased a seasonally adjusted 4.8 percent from the previous week.

On an unadjusted basis, the Index increased 5.0 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is down 2.07 percent.

Michael Fratantoni, MBA’s Vice President of Research and Economics, stated, “Applications to buy a home picked up last week, and are running more than two percent above the level reported at this time last year. Home purchase applications for conventional loans are now about 10 percent above last year’s level. Applications for government loans increased by more than 10 percent over the week, for both purchase and refinance, likely spurred by borrowers seeking to apply before scheduled increases in FHA mortgage insurance premiums at the beginning of April.”

Purchase Applications:

The seasonally adjusted Purchase Index increased 7.2 percent from the previous week. The four week moving average is up 3.48 percent for the adjusted Purchase Index.

The unadjusted Purchase Index increased 7.6 percent compared with the previous week and was 2.4 percent higher than the same week a year ago.

Refinance Applications:

The Refinance Index increased 4.0 percent from the previous week, the first increase for the Index in seven weeks. The four week moving average for the Index is down 3.73 percent.

The refinance share of mortgage activity decreased to 71.2 percent of total applications from 73.4 percent the previous week, the lowest share since the end of July in 2011.

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)

4.16

4.23

0.43

0.45

Decreased

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

4.46

4.54

0.49

0.46

Decreased

15-Year FRM

3.40

3.50

0.41

0.42

Decreased

FHA 30-Year

3.89

3.96

0.46

0.49

Decreased

5/1 ARM

2.93

3.00

0.34

0.42

Decreased

The adjustable-rate mortgage (ARM) share of activity increased to 5.5 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