Mortgage Applications Continue Shifting Towards Purchases

There wererncontinued indications during the week ended March 21 of the anticipated 2014rndecrease in mortgage volume and the market’s gradual shift to one dominated byrnpurchasing rather than refinancing.  The MortgagernBankers Association (MBA) has projected a substantial reduction in the level ofrnmortgage applications this year, induced principally by a decline inrnrefinancing.  In February the associationrnsaid it expected a $1.1 trillion year, almost 40 percent below the $1.8rntrillion volume in 2013.  The purchasernmarket is expected to increase modestly, but not enough to compensate for fallingrnrefinancing activity.</p

MBA’s WeeklyrnMortgage Applications Survey was set against a rare revision to earlier data asrnMBA changed the previously reported level of the seasonally adjusted MarketrnComposite Index for the week ended March 14 from -1.2 percent to an increase ofrn0.2 percent. </p

The index for thernmost recent week, a measure of overall mortgage application activity, declinedrn3.5 percent from the revised base.  On anrnunadjusted basis the index was down 3 percent. rn</p

The RefinancernIndex dropped 8 percent from the previous week, driven by an 8.1 percent fallrnin conventional refinance applications and a 5.8 percent negative shift in therngovernment refinance index which was at its lowest point since July 2011.   Refinancing had a 54 percent share of totalrnapplications, down from 57 percent the previous week and the smallest share forrnrefinancing since April 2010.   </p

Refinance Index vs 30 Yr Fixed</p

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The seasonallyrnadjusted Purchase Index however increased 3 percent from the previous week withrna 4.0 percent bump in conventional purchase applications.  Government purchase applications werernessentially unchanged.  The unadjustedrnPurchase Index increased 3 percent week-over-week but was 17 percent below itsrnlevel one year earlier.</p

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