Global Uncertainty said Behind Busy Mortgage Week

Last week was the strongest one on a relative basis for mortgagernapplications in quite some time. The Mortgage Bankers Association (MBA) saidrnthat its Market Composite Index, a measure of application volume rose 11.3rnpercent on a seasonally adjusted basis during the week ended August 28. On anrnunadjusted basis the index was up 10 percent compared to the week ended Augustrn21.  It appeared to be the largestrnpercentage gain in applications since January.</p

A jump in applicationsrnfor refinancing was credited for the higher volume during the week.  The Refinance Index rose 17 percent to thernhighest level since April and the refinance share of mortgage activity increased torn58.7 percent from 55.3 percent the previous week. It was the highest share attributedrnto refinancing since March.</p

Applications for purchase mortgages rose at a more sedate pace, but the 4rnpercent increase was still enough to return the seasonally adjusted PurchasernIndex back to July levels.  On anrnunadjusted basis the index was up 2 percent and was 25 percent higher thanrnduring the same week in 2014. </p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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“Although mortgage rates were unchangedrnfor the week, Treasury rates were down sharply early in the week due to thernglobal stock market rout and this led to a significant increase in applicationrnvolume,” said Mike Fratantoni, MBA’s Chief Economist.  In addition to Fratantoni noting Treasury fluctuations, we’d also not that mortgage rates themselves went on same volatile ride, with Monday’s rates being the lowest in more than 3 months.  MBA and Freddie Mac data are weekly surveys that do not capture the day to day movements.</p

The FHA share of total applications dippedrnfrom 13.1 percent to 12.7 percent and applications for VA mortgages declined 9.8rnpercent from 11.4 percent.  The USDArnshare of total applicationsrndecreased to 0.7 percent from 0.8 percent. </p

The average contract interest rate for<b30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 orrnless) was unchanged at 4.08 percent. rnPoints rose to 0.37 from 0.36 and the effective rate was unchanged.</p

Thirty-year FRM with jumbo balancesrngreater than $417,000 had a contract rate of 4.05 percent, up from 4.00rnpercent.  Points increased to 0.28 fromrn0.24 and the effective rate increased.  </p

The average contract interest rate forrn30-year FRM backed by the FHA declined by 3 basis points to 3.87 percent whilernpoints jumped to 0.32 from 0.21.  Therneffective rate increased from the previous week. </p

The average contract interest rate forrn15-year FRM dipped to 3.30 percent from 3.33 percent, with points decreasing torn0.26 from 0.31. The effective rate was lower than during the previous week.</p

Adjustable rate mortgages (ARM) had a 7.5rnpercent share of application volume, up from 6.8 a week earlier.  The average contract interest rate for 5/1rnARMs increased to 3.05 percent from 2.96 percent, with points unchanged atrn0.36. The effective rate increased from lastrnweek.</p

MBA’s Weekly Mortgage Application Survey,rnwhich has been conducted since 1990, covers over 75 percent of all U.S. retailrnresidential mortgage applications. rnSurvey respondents include mortgage bankers, commercial banks andrnthrifts. Base period and value for all indexes is March 16, 1990=100. rnInterest rates presume a loan with an 80 percent loan to value ratio andrnpoints that include the origination fee.

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