Mortgage Application Volume Settles Back after Record Week

Mortgage application activity eased slightlyrnlast week after reaching recent record high levels during the week endedrnSeptember 29.  The Mortgage BankersrnAssociation (MBA) said this morning that its Market Composite Index, a measurernof loan application volume, decreased 1.2 percent on a seasonally adjustedrnbasis during the week ended October 5. rnOn an unadjusted basis it was down 1.0 percent.  It had surged over 16 percent the previousrnweek.</p

The Refinancing Index, which had drivenrnthe earlier activity, was down 2 percent although the refinance share ofrnmortgage activity remained unchanged at 83 percent.  The seasonally adjusted Purchase Index was uprn2 percent and the unadjusted index increased 3 percent from the previous weekrnand was 12 percent higher than during the same week in 2011.</p

Refinance applicationsrndeclined somewhat last week although volume is still near three-year highs, andrnpurchase applications increased to the highest level since June, with bothrnconventional and government volumes increasing,” said Mike Fratantoni, MBA’srnVice President of Research and Economics.  “Rates on 30-year fixed-raternloans remain historically low, benefitting both prospective homebuyers andrnthose seeking to refinance.”</p

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

The<bjumbo 30-year FRM (balances over $417,500) decreased to 3.74 percent, thernlowest rate in the history of the survey, from 3.82 percent the previousrnweek.  Points increased to 0.40 from 0.32rnand the effective rate decreased.</p

FHA-backed 30-year FRM also hit a newrnlow at 3.34 percent, down from 3.37 percent although points jumped to 0.71 fromrn0.36 and the effective rate increased. rnThe 15-year FRM also set a new low at 2.88 percent compared to 2.90rnpercent a week earlier, but again fees were up from 0.27 to 0.40 and therneffective rate increased.</p

The average contractrnrate for 5/1 adjustable rate mortgages (ARMs) increased one basis point to 2.60rnpercent and points increased from 0.34 to 0.36. rnThe effective rate also increased. rnThe ARM share of activity decreased to 3.9 percent of totalrnapplications, matching the lowest level since December 2009.</p

Rates are based on arnloan-to-value ratio of 80 percent and fees include the application fee.</p

MBA’s Weekly Mortgage ApplicationsrnSurvey from which the data is derived covers over 75 percent of all U.S. retail residential mortgagernapplications, and has been conducted weekly since 1990.  Respondentsrninclude mortgage bankers, commercial banks and thrifts.  The base periodrnand value for all indexes is March 16, 1990=100.

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