The Market Composite Index, a measure of mortgage loan application volume,rnincreased 1.1 percent on a seasonally adjusted basis from one week earlier. Onrnan unadjusted basis, the Index increased 0.9 percent compared with the previousrnweek.  The four week moving average forrnthe seasonally adjusted Market Index is up 5.2 percent.  </p

The Refinance Index increased 0.9 percent to its highest level sincernDecember 10, 2010.  The four week moving average is up up 7.1 percent forrnthe Refinance Index. The refinance share of mortgage activity increased to 66.8rnpercent of total applications from 66.7 percent the previous week. This is thernhighest refinance share since January 28, 2011. </p

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The seasonally adjusted Purchase Index increased 1.5 percent from one weekrnearlier. The unadjusted Purchase Index increased 0.8 percent compared with thernprevious week and was 3.1 percent higher than the same week one year ago.  The four week moving average is up 1.2rnpercent for the seasonally adjusted Purchase Index.</p

<br /<br /The average contract interest rate for 30-year fixed-rate mortgagesrnincreased to 4.69 percent from 4.60 percent, with pointsrndecreasing to 0.69 from 0.93 (including the origination fee) for 80 percentrnloan-to-value (LTV) ratio loans. The effective rate also increased from last week.<br /<br /The average contract interest rate for 15-year fixed-rate mortgagesrnincreased to 3.78 percent from 3.75 percent, with pointsrndecreasing to 1.04 from 1.22 (including the origination fee) for 80 percent LTVrnloans. The effective rate also decreased from last week.</p

The adjustable-rate mortgage (ARM) share of activity decreased to 5.8rnpercent from 6.3 percent of total applications from the previous week.</p

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Rates are at 6-month lows but loan demand hasn’t increased as much as one might have anticipated. Last week we wrote, “Right now we’re witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers.” says MND’s Managing Editor Adam Quinones. “However, if conventional 30-year rates reach 4.25%, we’d expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air” </p

In reaction to that comment, Ted Rood, a loan originator from MetLife Home Loans added, “One thing to consider regarding refi volume is that HUD effectively ended FHA streamlines over the course of the last year by tightening underwriting guidelines and jacking up monthly MIP fees. After the change, many existing FHA clients have been unable to meet net benefit rules,  even when dropping their rate by 1% or more, since their monthly MIP would double on the new loan. So FHA clients don’t get to benefit from lower rates and HUD doesn’t get new upfront MIPs from existing clients with clean payment histories who want to refinance”.</p

READ MORE: New FHA MIP Structure to Slow Streamlines</p

READ MORE: Rents Seen Rising as Poor Credit Hurts Homeownership Demand</p

READ MORE: Realtors Request Looser Credit Regs as Home Sales Decline</prn

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