Refinance Application Volume Continues to Surge

August 17, 2011 (Chris Moore)

Mortgage interest rates continued their march downward fueling refinance applications for the second consecutive week according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 12, 2011. The Market Composite Index, a measure of mortgage loan application volume increased 4.1 percent as refinance applications surged to almost 79 percent if all mortgage applications.

On an unadjusted basis, the Index increased 3.6 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 9.1 percent from one week earlier. The four week moving average is down 2.2 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 10.1 percent compared with the previous week, and is 1.1 percent lower than the same week one year ago.

Refinance Activity:

The Refinance Index increased 8.0 percent from the previous week. The four week moving average is up 10.1 percent.

The refinance share of mortgage activity increased to 78.8 percent of total applications from 75.6 percent last week.

Mortgage Interest Rates:

30-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 4.32 percent from 4.37 percent last week, with points decreasing to 0.87 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week.

15-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 3.47 percent from 3.52 percent last week, with points increasing to 1.08 from 0.96 (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 decreased to 5.8 percent from 6.1 percent the previous week.

“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Purchase application activity fell sharply over the previous week, likely the result of potential homebuyers hesitant to purchase in this highly volatile and uncertain environment.”

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

Sources:
Mortgage Bankers Association