Mortgage Applications Tumble as Refi Demand Dries Up

August 31, 2011 (Chris Moore)

Applications for mortgage loans tumbled again last week as refinancing demand sagged for the second consecutive week and mortgage applications for home purchases remained near 15-year lows according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 26, 2011.

The Market Composite Index, a measure of mortgage loan application volume, which includes purchase applications and refinance applications, decreased a seasonally adjusted 9.6 percent from the previous week.

On an unadjusted basis, the Index decreased 10.0 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.5 percent.

Purchase Applications:

The seasonally adjusted Purchase Index increased 0.9 percent from one week earlier, but remains near 15-year lows. The four week moving average is down 3.8 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 1.3 percent from the previous week, and is 8.2 percent lower than the same week one year ago.

Refinance Activity:

The Refinance Index tumbled 12.2 percent from the previous week. The four week moving average for the Refinance Index is up 4.2 percent.

The refinance share of mortgage activity decreased to 77.8 percent of total applications from 79.8 percent last week.

Mortgage Interest Rates:

30-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 4.32 percent from 4.39 percent last week, with points increasing to 1.30 from 0.88 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. However, the effective rate increased from last week due to a hefty increase in the average points paid.

15-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 3.49 percent from 3.56 percent last week, with points unchanged from last week at 1.00 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

ARMs:

The adjustable-rate mortgage (ARM) share of activity increased to 7.1 percent from 6.2 percent the previous week.

“Accounting for the increase in average points paid, effective mortgage rates were little changed last week. Refinance application volume declined for a second week from recent highs, despite rates staying near a 10-month low, while purchase volume remained near 15-year lows,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.

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

Sources:
Mortgage Bankers Association