Refinance Applications Dry Up Despite Low Interest Rates

November 16, 2011 (Chris Moore)

Refinance applications tumbled last week even though mortgage rates remained virtually unchanged from the previous week according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2011.

The Market Composite Index, a measure of mortgage loan application volume which includes purchase applications and refinance applications, decreased a seasonally adjusted 10.0 percent from the previous week.

On an unadjusted basis, the Index decreased 19.6 percent from the previous week. The four week moving average for the seasonally adjusted Market Index is up 1.02 percent.

Purchase Applications:

The seasonally adjusted Purchase Index decreased 2.3 percent from the previous week. The four week moving average is up 2.53 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 14.8 percent compared with the previous week and was 9.5 percent lower than the same week a year ago.

Refinance Applications:

The Refinance Index decreased 12.2 percent from the previous week while the four week moving average for the Index is up 0.61 percent.

The refinance share of mortgage activity declined to 77.3 percent of total applications from 78.6 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)

4.23

4.22

0.52

0.41

Increased

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

4.56

4.57

0.46

0.47

Decreased

15-Year FRM

3.54

3.54

0.47

0.45

Increased

FHA 30-Year

4.03

4.02

0.59

0.49

Increased

5/1 ARM

3.01

3.01

0.49

0.47

Increased

The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent of total applications from 5.8 percent the previous week.

During the month of October, 50.6 percent of borrowers who refinanced an existing mortgage applied for a 30-year fixed rate mortgage, 28.8 percent applied for a 15-year fixed rate mortgage, and 6.0 percent applied for an adjustable rate mortgage.

Also in the same month, 85.5 percent of the purchase applications were for 30-year fixed rate mortgages, 6.9 percent were for 15-year fixed rate mortgages and 5.9 percent were for an adjustable rate mortgage.

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