U.S. mortgage applications fell 4.3% in latest week from previous week; applications to refinance fell 5.2%, applications to purchase decreased 0.8%: MBA
October 5, 2011
– Mortgage applications decreased 4.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 30, 2011.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4.5 percent compared with the previous week. The Refinance Index decreased 5.2 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.8 percent from one week earlier. The unadjusted Purchase Index decreased 1.7 percent compared with the previous week and was 12.1 percent lower than the same week one year ago.
The four week moving average for the seasonally adjusted Market Index is up 2.44 percent. The four week moving average is down 0.33 percent for the seasonally adjusted Purchase Index, while this average is up 3.24 percent for the Refinance Index.
“Interest rates continued to fall last week, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities, but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Refinance application volume declined and purchase volume was little changed. Purchase borrowers continue to value the government lending programs that permit lower down payments. The government share of purchase applications decreased slightly to 41.6 percent last week, and while this is down from a recent peak of 50.4 percent in April 2010, it is still well above the pre-2009 survey average of 23.6 percent. Many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27.0 percent of refinance volume last week.”
The refinance share of mortgage activity decreased to 79.1 percent of total applications from 79.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent from 6.1 percent of total applications from the previous week.
In August 2011, among refinance borrowers, 50.7 percent of applications were for fixed-rate 30-year loans, 31.0 percent for 15-year fixed loans, and 7.1 percent for ARMs. The 15-year refinance share is at its highest point since the survey was re-benchmarked in January 2011. For applications for home purchase, 90.1 percent were for fixed-rate 30-year loans, 7.7 percent for 15-year fixed loans, and 6.6 percent for ARMs. This is the lowest ARM share for purchases since January 2011.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.18 percent from 4.24 percent, with points increasing to 0.44 from 0.36 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.49 percent from 4.53 percent, with points increasing to 0.41 from 0.39 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.05 percent from 4.06 percent, with points increasing to 0.69 from 0.42 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.49 percent from 3.46 percent, with points decreasing to 0.45 from 0.48 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.
The average contract interest rate for 5/1 ARMs increased to 3.02 percent from 2.95 percent, with points decreasing to 0.41 from 0.50 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.
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The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.