Refinance Apps Fall for Third Consecutive Week Despite Record Low Rates

September 7, 2011 (Chris Moore)

Mortgage loan applications continued to tumble last week despite a new survey record low of 3.41 percent for a 15-year fixed rate mortgage as purchase applications remained flat and refinance applications declined for the third consecutive week according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 2, 2011.

The Market Composite Index, a measure of mortgage loan application volume, which includes purchase applications and refinance applications, decreased a seasonally adjusted 4.9 percent from the previous week.

On an unadjusted basis, the Index decreased 5.3 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is down 3.2 percent.

Purchase Applications:

The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier but remains at extremely low levels not seen since 1996. The four week moving average is down 3.7 percent for the adjusted Purchase Index.

The unadjusted Purchase Index decreased 2.1 percent compared with the previous week, and is 13.5 percent lower than the same week one year ago.

Refinance Activity:

The Refinance Index fell another 6.3 percent after a 12.2 percent tumble the previous week. The four week moving average is down 3.1 percent. Despite interest rates being at near record levels, refinance applications are 35 percent below the levels seen a year ago.

The refinance share of mortgage activity decreased to 77.1 percent of total applications from 77.8 percent last week.

Mortgage Interest Rates:

30-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 4.23 percent from 4.32 percent last week, with points decreasing to 1.04 from 1.29 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week. The 30-year FRM was at its second lowest level in survey history.

15-year fixed-rate mortgage (FRM): The average contract interest rate decreased to 3.41 percent from 3.49 percent last week, with points decreasing to 0.94 from 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 remained unchanged from the previous week at 7.1 percent of total applications.

“Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey (the low point was reached last October), and the 15-year rate marked a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Despite these rates however, refinance application volume fell for the third straight week, and is more than 35 percent below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996.”

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

Sources:
Mortgage Bankers Association