Refinancing Continues to Drive Application Volume

The
Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey
reported that mortgage applications as measured by its Market Composite Index
were down 2.9 percent on a seasonally adjusted basis during the week ended
January 27 but increased 9.0 percent from the previous week on an unadjusted
basis.

The
seasonally adjusted Purchase Index was down 1.7 percent while it increased 17.1
percent on an unadjusted basis from the week ended January 20 and was 4.3
percent lower than during the same week in 2011.  The Refinance Index decreased 3.6 percent
from the previous week.

All
of the four week moving averages were higher for the week.  The seasonally adjusted Market Index rose
4.11 percent, the seasonally adjusted Purchase Index was up 2.48 percent and
the Refinance Index increased 4.22 percent.

Applications for
refinancing represented 80.0 percent of all applications, down from 81.3
percent the previous week.  Applications
for adjustable-rate mortgages (ARMs) had a 5.6 percent market share compared to
5.3 percent a week earlier.

Refinancing
applications in December increased in every U.S. state according to MBA and,
despite multiple holidays only 12 states had fewer purchase applications than
in November.  In Connecticut refinancing
applications increased 80.1 percent from November and Maine saw a 30.8 percent
increase in applications for home purchase mortgages.

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

Rates fell for all
fixed rate mortgages (FRM) compared to the previous week.  The average contract interest rate for
30-year conforming FRM (balances under $417,500) decreased to 4.09 percent with
0.41 point from 4.11 with 0.47 point. Rates for jumbo mortgages (those with
balances over $417,500) decreased from 4.39 percent to 4.33 percent while
points increased from 0.40 to 0.41.  This
is the lowest rate for the 30-year jumbo mortgages since MBA started tracking
them one year ago. 

FHA backed 30-year
FRM rates decreased one basis point to 3.96 percent with points increasing to
0.61 from 0.57.  Rates for the 15-year
FRM were down from 3.40 percent with 0.40 point to 3.36 percent with 0.41
point.  The effective rate of all of the
mortgage products listed above also decreased.

The sole rate increase was for the 5/1 ARM which increased on average to 2.94 percent with 0.39 point
from 2.91 percent with 0.41 point.  The
effective rate also increased. 

Follow what drives changes in mortgage rate each day with Mortgage Rate Watch from MND.

All rates quoted
are for 80 percent loan to value loans and points include the origination fee.

Michael
Fratantoni, MBA’s Vice President of Research and Economics said of the week’s
results, “The Federal Reserve surprised the market last week by indicating
that short-term rates were likely to stay at their current low-levels until the
end of 2014.  Longer-term treasury rates dropped in response, and mortgage
rates for the week were down slightly as a result.  Although total application volume dropped on
an adjusted basis relative to last week, refinance volume remains high, with
survey participants reporting that the expanded Home Affordable Refinance
Program (HARP) contributed to roughly 10 percent of their refinance
activity.”

MBA’s weekly
survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted since 1990.  Respondents include
mortgage bankers, commercial banks and thrifts.  Base period and value for
all indexes is March 16, 1990=100.

…(read more)

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