Refinance Mortgage Applications Jump as Interest Rates Continue to Decline

May 18, 2011 (Chris Moore)

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 13, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 7.8 percent on a seasonally adjusted basis from last week as refinance mortgage applications lifted the overall index higher due to declining interest rates while purchase applications declined.

On an unadjusted basis, the Index increased 7.1 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.6 percent.

The seasonally adjusted Purchase Index decreased 3.2 percent from one week earlier. The four week moving average is down 2.9 percent for the seasonally adjusted Purchase Index. The unadjusted Purchase Index decreased 3.3 percent compared with the previous week and was 1.7 percent lower than the same week one year ago.

“The 30-year fixed mortgage rate is now 53 basis points below its 2011 peak, and has decreased for five straight weeks,” said Michael Fratantoni, MBA’s Vice President of Research. “Over this five week span, the refinance index has increased by about 33 percent. Refinance application volumes remain about 50 percent below the most recent peak last October. ”

The Refinance Index increased 13.2 percent from the previous week. The four week moving average is up 7.2 percent. The index is at its highest level since the second week of December.

The refinance share of mortgage activity increased to 66.7 percent of total applications from 63.1 percent last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent from 6.5 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.60 percent from 4.67 percent last week, with points decreasing to 0.94 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.75 percent from 3.81 percent last week, with points decreasing to 1.22 from 1.05 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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

Sources:
MBA