Strong Refinance Activity Pushes Up Mortgage Applications

July 21, 2011 (Chris Moore)

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 15, 2011. The Market Composite Index, a measure of mortgage loan application volume increased 15.5 percent in response to a 23 percent surge in refinance activity following four straight weeks of declines.

On an unadjusted basis, the Index increased 43.9 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 0.3 percent.

The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The four week moving average is down 0.3 percent for the seasonally adjusted Purchase Index. The unadjusted Purchase Index increased 25.1 percent compared with the previous week, and is 8.3 percent higher than the same week one year ago.

The Refinance Index increased 23.1 percent from the previous week. The four week moving average is up 0.5 percent.

The refinance share of mortgage activity increased to 70.1 percent of total applications from 65.6 percent last week, the highest level seen in the last six months.

The adjustable-rate mortgage (ARM) share of activity increased to 5.8 percent from 5.5 percent the previous week.

“Ongoing turmoil in the financial markets primarily due to the sovereign debt crisis in Europe has brought mortgage rates back to their lowest levels of the year,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance applications have surged in response and the refinance index is at its second highest level of the year. One factor that may be contributing to this increase is that borrowers potentially impacted by impending decreases in the conforming loan limit may be opting to lock in fixed-rate financing now.”

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.54 percent from 4.55 percent last week, with points decreasing to 0.98 from 0.99 (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 3.66 percent from 3.68 percent last week, with points decreasing to 0.97 from 1.10 (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