Mortgage Applications Up on Strong Refi Surge as Interest Rates Fall

November 9, 2011 (Chris Moore)

Mortgage interest rates dropped to their second lowest level of the year prompting a surge in refinance applications according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 4, 2011.

The Market Composite Index, a measure of mortgage loan application volume which includes purchase applications and refinance applications, increased a seasonally adjusted 10.3 percent from the previous week.

On an unadjusted basis, the Index increased 9.9 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is down 0.37 percent.

Purchase Applications:

The seasonally adjusted Purchase Index increased 4.8 percent from the previous week, the highest the Index has been since August. The four week moving average is up 0.89 percent for the adjusted Purchase Index.

The unadjusted Purchase Index increased 2.7 percent compared with the previous week and was 2.5 percent lower than the same week a year ago.

Refinance Applications:

The Refinance Index increased 12.1 percent from the previous week while the four week moving average for the Index is down 0.72 percent.

The refinance share of mortgage activity increased to 78.6 percent of total applications from 77.1 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)

4.22

4.31

0.41

0.49

Decreased

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

4.57

4.69

0.47

0.45

Decreased

15-Year FRM

3.54

3.63

0.45

0.45

Decreased

FHA 30-Year

4.02

4.09

0.49

0.51

Decreased

5/1 ARM

3.01

3.09

0.47

0.50

Decreased

The adjustable-rate mortgage (ARM) share of activity remained unchanged from last week at 5.8 percent of total applications.

“Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and
30-year mortgage rates dropped to their second lowest level of the year,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Refinance applications jumped more than 12 percent to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to deleverage by choosing 15-year mortgages.”

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