Refis Drive Application Volume in MBA Weekly Surve

Carolyn Kemp – MBA Newslink |  Wednesday, July 7, 2010

Mortgage applications, driven by refinance activity and flat interest rates, rose by 6.7 percent last week, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending July 2.

The Market Composite Index increased by 6.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 6.5 percent compared to the previous week. The four-week moving average rose by 6.4 percent.

The seasonally adjusted Refinance Index increased by 9.2 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The four-week moving average rose by 8.3 percent. The refinance share of mortgage activity increased to 78.7 percent of total applications from 76.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009.

The seasonally adjusted Purchase Index decreased by 2.0 percent from one week earlier. The Purchase Index has decreased in eight of the past nine weeks. The unadjusted Purchase Index decreased by 2.3 percent compared to the previous week and was 34.7 percent lower than the same week one year ago. The four-week moving average rose by 0.1 percent.

“Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said MBA Vice President of Research and Economics Michael Fratantoni. “For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit.”

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent, with points decreasing to 0.86 from 0.96 (including the origination fee) for 80 percent loan-to-value ratio loans. The effective rate slightly decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.11 percent from 4.06 percent, with points decreasing to 0.93 from 0.97 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The average contract interest rate for one-year adjustable-rate mortgages increased to 7.20 percent from 7.05 percent, with points decreasing to 0.24 from 0.27 (including the origination fee) for 80 percent LTV loans. The  ARM share of activity increased to 5.4 percent from 4.7 percent of total applications from the previous week.

The survey covers more than 50 percent of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

Article at MBA Newslink