Mortgage Purchase Applications Hit 15 Year Low

August 24, 2011 (Chris Moore)

Mortgage loan applications declined last week as purchase applications hit 15 year lows and rising interest rates slowed refinance activity for the first time in three weeks according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 19, 2011.

The Market Composite Index, a measure of mortgage loan application volume decreased 2.4 percent as market volatility and economic uncertainty kept potential home buyers on the sidelines.

On an unadjusted basis, the Index decreased 2.9 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 6.9 percent.

Purchase Applications:

The seasonally adjusted Purchase Index decreased 5.7 percent from one week earlier and is at its lowest level since 1996. The four week moving average is down 2.6 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 7.3 percent compared with the previous week, and is 7.3 percent lower than the same week one year ago.

Refinance Activity:

The Refinance Index remained elevated but decreased a modest 1.7 percent from the previous week. The four week moving average is up 9.9 percent.

The refinance share of mortgage activity increased to 79.8 percent of total applications from 78.8 percent last week.

Mortgage Interest Rates:

30-year fixed-rate mortgage (FRM): The average contract interest rate increased to 4.39 percent from 4.32 percent last week, with points increasing to 0.88 from 0.86 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate increased from last week.

15-year fixed-rate mortgage (FRM): The average contract interest rate increased to 3.56 percent from 3.47 percent last week, with points decreasing to 1.00 from 1.08 (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 6.2 percent from 5.8 percent the previous week.

“Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent, and purchase applications for the government housing programs (FHA, VA, and USDA) falling by 8.2 percent. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly.”

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

Sources:
Mortgage Bankers Association