Mortgage Application Volume Declines as Rates Rise

by devteam October 24th, 2012 | Share

The Mortgage Bankers Association (MBA)rnsaid this morning that mortgage application activity dropped sharply during thernweek ended October 19.  The MBA’s MarketrnComposite Index, a measure of mortgage loan application volume, fell 12.0rnpercent on a seasonally adjusted basis and 2 percent on an unadjusted basisrnfrom the week ended October 12.  MBArnpointed out that the previous week’s seasonally adjusted number had also beenrntweaked higher to account for the Columbus Day holiday.</p

The Refinancing Index was down 13rnpercent to its lowest level since late August and the seasonally adjustedrnPurchase Index decreased 8 percent.  Onrnan unadjusted basis the purchase index was up 2 percent week-over-week and wasrn7 percent higher than during the same week in 2011.  Refinancing accounted for 81 percent of allrnmortgage applications compared to 82 percent a week earlier.  </p

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

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


Refinance Index vs 30 Yr Fixed</p

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


Mortgage rates increased across thernboard with both contract and effective rates higher than the previousrnweek.  The contract rate for 30-yearrnfixed-rate mortgages (FRM) with conforming balances ($417,500 or more) increasedrnfor the third straight week to 3.63 percent with 0.45 point.  The rate the previous week was 3.57 percentrnwith 0.44 point.</p

The contract rate for 30-year FRM withrnjumbo balances (over $417,500) rose to 3.85 percent from 3.81 percent withrnpoints unchanged at 0.42.  FHA-backedrn30-year FRM increased to 3.41 percent with 0.51 point from 3.34 percent withrn0.82 point.  The rate for 15-year FRM jumpedrn9 basis points to 2.96 percent with points decreasing to 0.36 from 0.39.</p

Adjustable rate mortgages (ARMs)rnaccounted for 4 percent of applications, a slight increase from the previousrnweek.  The average rate for 5/1 ARMSrnincreased to 2.72 percent with 0.33 point from 2.59 percent with 0.35 point.</p

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

MBA’s Weekly Mortgage Application Surveyrnfrom which the volume indices are derived has been conducted since 1990 and coversrnover 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers,rncommercial banks and thrifts.  Basernperiod and value for the indices is March 16, 1990=100.

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About the Author


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

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