Despite HARP, Purchase Increases, Application Volume Falls

Mortgage applications during the weekrnended March 9 declined 2.4 percent on a seasonally adjusted basis and 1.8rnpercent unadjusted from the previous week according to information releasedrnthis morning by the Mortgage Bankers Association (MBA).  The drop in the Market Composite Index, arnmeasure of loan application volume, was driven by the fourth consecutiverndecline in the Refinance Index component which was down 4.1 percent from thernweek ended March 2.  The seasonallyrnadjusted Purchase Index increased 4.4 percent from the previous week to thernhighest level since January 13.  On anrnunadjusted basis the Purchase Index was 6.0 percent higher than the previousrnweek and 0.4 percent below its level one year earlier.</p

The four week moving average for thernseasonally adjusted Market Index was down 2.12 percent and the Refinance Indexrndeclined 3.29 percent.  The movingrnaverage for the seasonally adjusted Purchase Index rose 2.92 percent.</p

The share of refinancing continued tornfall off of historic highs early in the year and represented 75.1 percent ofrntotal applications during the week compared to 77.0 percent the weekrnbefore.   This was the fourth consecutiverndecline in the market share of refinancing and the lowest share since Novemberrn25, 2011.</p

MichaelrnFratantoni, MBA’s Vice President of Research and Economics pointed out thatrnapplications for home purchases increased again last week, coinciding withrnanother strong job market report.  “Purchasernapplications are now almost 12 percent above the level one month ago, evenrnafter adjusting for typical seasonal patterns,” he said.  “However, this level of purchase activity,rnadjusted or unadjusted, was essentially unchanged when compared to the samerntime last year. Purchase activity remains subdued and within the narrow rangernwe have seen since the expiration of the homebuyer tax credit in 2010.  Refinancernapplication volume fell last week.  Although rates were unchanged onrnaverage, they trended up through the course of the week, and this likelyrndiscouraged many potential refinance applicants.”</p

Fratantonirnsaid that the volume of refinancing activity coming through the HARP program</bcontinued to increase last week and has provided 30 percent of the volume overrnthe last two weeks.  "Typical HARP loansrnhad loan-to-value ratios above 90 percent, indicating that lenders are reachingrnout to underwater borrowers."</p