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Falling Mortgage Rates Boost Purchase, Refinance Activity
Applications for both refinancing andrnhome purchase increased last week as mortgage interest rates retreated. The Mortgage Bankers Association (MBA) saidrnthat its Market Composite Index, a measure of overall mortgage applicationrnvolume, increased 5.5 percent on a seasonally adjusted basis during the weekrnended September 20 and increased 5.0 percent unadjusted. MBA also reported that contract interestrnrates fell between 13 and 18 basis points for the various products tracked inrnits Weekly Mortgage Applications Survey. rnEffective rates were down for all products as well.</p
The seasonally adjusted Purchase Index</bwas 7 percent higher than during the week ended September 13 and the unadjustedrnversion increased 5 percent from the previous week and was up 7 percent from thernlevel a year earlier. It was the mostrnactive week for purchase applications since July but therngovernment share of that business decreased to 28.4 percent from 29.9 percent,rnthe lowest level since early August and close to the series low of 28.2 percentrnin June 2013. </p
The Refinance Index</bincreased 5 percent from the previous week and refinancing maintained the same 61rnpercent share of the market it had the week before. Applications for refinancing through the HomernAffordable Refinancing Program represented a 41 percent share of allrnrefinancing applications, up from 40 percent the previous week and the highest portionrnsince MBA began tracking the program in early 2012. </p
Purchase Index vs 30 Yr Fixed</b</p
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Refinance Index vs 30 Yr Fixed</p
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The average contract interest rate for 30-year fixed-raternmortgages (FRM) with conforming loan balances of $417,000 was down to 4.62rnpercent with 0.41 point from 4.75 percent with 0.39 point. The jumbo 30-year FRM (balances overrn$417,000) fell from 4.83 percent to 4.66 percent and points decreased from 0.33rnto 0.29.</p
Thirty-year FRM with a FHA guarantee had anrnaverage contract rate of 4.32 percent with 0.37 point. During the previous week the average rate wasrn4.50 percent with 0.41 point.</p
The rate for a 15-year FRM was down 18 basis pointrnfrom the previous week to an average of 3.68 percent. Points decreased to 0.28 from 0.34.</p
Adjustable rate mortgages (ARM) had a 7 percent sharernof applications, unchanged from the previous week. The average rate for the 5/1 ARM dropped fromrn3.54 percent with 0.43 point to 3.39 percent with 0.35 point. </p
All interest rates are for loans with an 80rnpercent loan-to-value ratio. Pointsrninclude the origination fee. <br /<br /MBA's weekly survey covers over 75rnpercent of all U.S. retail residential mortgage applications, and has beenrnconducted weekly since 1990. Respondents include mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100.
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About the Author
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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