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MBA Cautions Holiday Week Application Surge may be Overstated

by devteam September 12th, 2012 | Share

The official end of summer seems to havernsignaled a resurgence in refinancing. rnDespite a week shortened by the Labor Day holiday, applications forrnrefinancing jumped 12 percent during the week ended September 7 according tornthe Mortgage Bankers Association’s (MBA) Weekly Mortgage Survey.  Applications for refinancing made up 80rnpercent of applications received during the week compared to 79 percent thernprevious week.</p

MBA cautioned that some lenders whornoriginate largely through the Internet saw little if any decline inrnapplications during the week when compared with lenders who rely on originationsrnthrough retail offices that closed for the holiday.  The Association speculates that the customaryrnadjustment to reflect the shorter work week might have overstated the level ofrnrefinancing as consumers may have used the extra leisure time to completernmortgage applications. </p

The Market Composite Index, a measure ofrnapplication volume jumped 11.1 percent on a seasonally adjusted basis and withrnan adjustment for the holiday and rose 12 percent on an unadjusted basis comparedrnwith the week ended September 1.  Thernseasonally adjusted Purchase Index was up 8 percent from the previous week; thernunadjusted Purchase Index rose 7 percent but was still down 15 percent from thernsame week in 2011.</p

Purchase Index vs 30 Yr Fixed</b</p

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Refinance Index vs 30 Yr Fixed</p

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Contract interest rates decreased acrossrnthe board during the week and effective rates decreased for all loans exceptrnthe 5/1 adjustable rate mortgage (ARM). rnThe average contract rate for 30-year fixed rate mortgages (FRM) withrnconforming loan balances ($417,500 or less) decreased to 3.75 percent from 3.78rnpercent with points increasing to 0.44 from 0.37.  The rate for the jumbo 30-year FRM (balancesrnabove $417.500) decreased to 4.0 percent with 0.30 point from 4.05 percent withrn0.30 point.</p

FHA-backed 30-year FRM had an averagernrate of 3.50 percent with 0.43 point, down from 3.54 percent with 0.44 point.  This is a new low in the history of the MBArnsurvey.</p

The rate for 15-year FRM decreased torn3.07 percent from 3.10 percent with points increasing to 0.38 from 0.37.</p

The contract rate for 5/1 ARMS decreasedrnby 1 basis point to 2.63 percent, a new low in survey history, an increase inrnpoints from 0.35 to 0.47 drove the effective rate higher than during thernprevious week.  The ARM share ofrnapplications for the week decreased to 4.5 percent.</p

All interest rate figures are for loansrnwith 80 percent loan to value ratios and points include the application fee.</p

MBA’srnsurvey covers over 75 percentrnof all U.S. retail residential mortgage applications, and has been conductedrnweekly since 1990.  Respondents include mortgage bankers, commercial banksrnand thrifts.  Base period and value for all indexes is March 16, 1990=100.

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

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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