WASHINGTON, D.C. – August 17, 2011 – (RealEstateRama) — Mortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 12, 2011.
The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was 13.5 percent lower than a year ago. The Refinance Index increased 8.0 percent from the previous week, but was 16.3 percent lower than the same week last year. The seasonally adjusted Purchase Index decreased 9.1 percent from one week earlier. The unadjusted Purchase Index decreased 10.1 percent compared with the previous week and was 1.1 percent lower than the same week one year ago.
“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Purchase application activity fell sharply over the previous week, likely the result of potential homebuyers hesitant to purchase in this highly volatile and uncertain environment.”
Fratantoni continued, “Refinance application volume increased substantially for the week, although there was substantial variation across the market. In September MBA’s Weekly Applications Survey will transition to an expanded sample that covers 75% of the retail market rather than the current sample that covers roughly 50% of the retail market. That expanded sample showed a significantly larger increase in refinance applications than the current sample, with some lenders reporting increases in refinance applications in excess of 50 percent for the week. The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines.”
The four week moving average for the seasonally adjusted Market Index is up 6.9 percent. The four week moving average is down 2.2 percent for the seasonally adjusted Purchase Index, while this average is up 10.1 percent for the Refinance Index.
The refinance share of mortgage activity increased to 78.8 percent of total applications from 75.6 percent the previous week, the highest the refinance share has been since November 2010. The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent from 6.1 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.37 percent, with points decreasing to 0.87 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week. The 30-year fixed contract rate has decreased for three straight weeks and is at a new low for this year.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.47 percent from 3.52 percent, with points increasing to 1.08 from 0.96 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week. The 15-year contract rate is at lowest level in the history of this survey.
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The survey covers over 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. 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.