FHA Applications Skyrocket as Expected Following MIP Change

Mortgage activity showed no signs of settling down from its rather wildrnand wooly behavior since the first of the year.  Data from the Mortgage Bankers Associationrn(MBA) was all over the place during the week ended January 30, apparentlyrnbecause of the new lower annual rates for FHA loans that went into effectrnduring the week.  Shares of applicationsrnshifted toward FHA loans and the outliers were in the non-adjusted data.  </p

The MBA’s seasonally adjusted Market Composite Index, a measure of mortgagernapplication volume, increased a slight 1.3 percent during the week endedrnJanuary 30.  However, on an unadjustedrnbasis that index was 15 percent higher than the week before. </p

Refinancing, which had been the primary driver of earlier index swings rosern3 percent compared to the week ended January 23.</p

Refinance Index vs 30 Yr Fixed</p

ChartManager.loadChart(‘refiappschart’, ‘RefiMtgAppChart’);

</p

The seasonally adjusted Purchase Index wasrnactually down, losing 2 percent but the unadjusted Purchase Index increased 16rnpercent week-over-week and was 3 percent higher than during the same week inrn2014.</p

Purchase Index vs 30 Yr Fixed</p

ChartManager.loadChart(‘purchaseappschart’, ‘PurchaseMtgAppChart’);

</p

Lynn Fisher, MBA’s Vice President of Research and Economics said, “Following severalrnweeks of already elevated refinance activity due to falling interest rates, FHArnrefinance applications increasedrn76.5 percent in response to a reductionrnin annual mortgagerninsurance premiums which took effectrnJanuary 26.   Conventional refinance volume was up only 0.5 percentrnfor the week while VA refinance volume was down 24.3 percent. FHA purchase applicationsrnwere also up 12.4 percent over the week prior, despite a decrease in purchasernapplications in the rest of the market.”</p

The refinance share of mortgage activityrndecreased to 71 percent of total applications from 72 percent the previous weekrnwhile the FHA share, buoyed by premium decreases, increased to 13.1 percent fromrn9.1 percent.   The VA share mortgage applications decreased torn8.5 percent this week from 10.7 percent last week and USDA guaranteed mortgagesrnlost 1 basis point to a 0.6 percent share.</p

“Both FHA and VA rates have essentially been pushed against the lower bound of 3.25% and haven’t had the same sort of relative improvement as conventional rates,” notes Mortgage News Daily’s Matt Graham.  “FHA was able to benefit from the MIP changes but VA, of course, was not.”</p

Although the activity was more subdued onrnthe interest rate front, those too were a bit mixed with two products reaching recentrnlows and another rising slightly.  Thern30-year fixed-rate mortgage (FRM) with conforming balances of $417,000 or lessrnwas at its lowest level since May 2013 at 3.79 percent with 0.19 point, and withrna lower effective rate.   The rate hadrnbeen 3.83 percent with 0.26 point the previous week.</p

The average contract interest rate for jumborn30-year FRM (balances greater than $417,000) was also back to May 2013rnlevels, falling by 5 basis points to 3.82 percent.  Points decreased to 0.22 from 0.33 and therneffective rate decreased from the previous week. </p

The average contract interest rate forrn30-year fixed-rate mortgages backed by the FHA decreased to 3.69 percent from 3.71 percent, with points remainingrnunchanged at 0.07.  The effective rate alsorndecreased.</p

Fifteen-year FRM had an average contractrnrate of 3.14 percent, down 1 basis point from the previous week while pointsrnincreased to 0.31 from 0.28.  Therneffective rate was unchanged. </p

The rate for 5/1 adjustable rate mortgagesrn(ARMs) increased to 3.03 percent from 2.96 percent, with points decreasing to 0.39 from 0.42rnand the effective rate rose.   The ARM share of application activity decreasedrnto 5.3 percent of total applications from 5.7 percent the week before.</p

Data on applications and rates is gatheredrnby MBA from its Weekly Mortgage Application Survey which has been conductedrnsince 1990 and covers over 75 percent of all U.S. retail residential mortgage applications.  Respondentsrninclude mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100.and interestrnrates assume a mortgage with an 80 percent loan to value ration and points thatrninclude the origination fee.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.