Mortgage Apps Pull Back From Multi-Year Highs

application volume
as measured by the Mortgage Bankers Association’s (MBA) Market
Composite Index fell 7.1 percent during the week ended June 22. The change was
the same for both seasonally adjusted and unadjusted data.  Responses to MBA’s Weekly Mortgage
Applications Survey send the Refinance Index down 8 percent from the week ended
June 15 and the refinancing share of mortgage activity decreased from 80 percent of total applications
to 79 percent.  The seasonally
adjusted Purchase Index was down 1 percent from a week earlier while the
unadjusted index decreased 2 percent week-over-week and 3 percent from a year

“Refinance volume fell
last week due largely to a fall-off in refinance applications for government
loans, which had more than doubled the prior week,” said Michael Fratantoni,
MBA’s Vice President of Research and Economics.  “The large swings in
activity were due to the implementation of FHA’s new premiums on streamline
refinances, and borrowers timing their applications to lower their premiums.”

“The decline in the refi index isn’t particularly troubling considering
the past two weeks saw the highest levels since early 2009,” says
Mortgage News Daily’s Matthew Graham.  “The pop higher in apps was fueled not only by the drop in FHA MIPs
on June 11th, but also by fresh record low rates, as well as the
announcements by several big box lenders that they’d no longer be
accepting open access (or “different servicer”) streamline
applications.  These factors not only helped concentrate application
volume in the previous two cycles, but the pull-back in open access availability
likely weighs on the current cycle as it raised new hurdles for some
borrowers, or at the very least, decreased the market’s overall capacity
to churn out streamlines.  Bottom line: this week’s drop makes sense.”

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

Interest rates were
mixed.  The contract rate for the most
popular product, the conforming (loan balance of $417,500 or less) 30-year
fixed-rate mortgage (FRM)   Jumbo 30-year FRM, (balances over $417,500)
increased to 4.12 percent with 0.35 point from 4.06 percent with 0.38 point and
the effective rate increased as well.   

The average contract
interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent from
3.25 percent, with points decreasing to 0.44 from
0.45. The effective rate decreased from the previous week.

The average contract
interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to
3.71 percent from 3.72 percent, with points decreasing to 0.46 from 0.47. The
affective rate decreased.

Adjustable rate
mortgages (ARMs) had a 4 percent share of mortgage applications filed during
the week.  The average contract interest
rate for 5/1 ARMs increased to 2.81 percent from 2.75 percent, with
points increasing to 0.41 from 0.33. The
effective rate increased from last week.

All interest rates
quoted are for loans with an 80 percent loan-to-value ratio and points include the
origination fee. 

 MBA’s 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.  The base period and value for all indexes is
March 16, 1990+100.

…(read more)

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