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Mortgage Applications Fall 8.1% as Rates Tick Up Sharply

by devteam January 30th, 2013 | Share

After a strong showing in the first fewrnweeks of the New Year, mortgage applications dropped sharply during the weekrnended January 25.  The Mortgage BankersrnAssociation (MBA) reported that its Market Composite Index, a measure of applicationrnvolume, decreased 8.1 percent on a seasonally adjusted basis from the previousrnweek and was down 17 percent on an unadjusted basis.  The results included an adjustment to accountrnfor a week shortened by the Martin Luther King holiday.</p

ThernRefinance Index decreased 10 percent from the week ended January 18 andrnrefinancing dropped from the 82 percent share of mortgage activity it hadrnmaintained for several weeks to a 79 percent share. The HARP share of refinance applicationsrnincreased to 26 percent from 25 percent. </p

Applicationsrnfor purchase mortgages were down 2 percent on a seasonally adjusted basis fromrnthe previous week and down 6 percent unadjusted.  The unadjusted purchase index was 2 percentrnhigher than during the same week in 2011.</p

MBA’s Mortgage Application Survey alsorngathers information on average contract interest and effective rates and thosernincreased for all fixed-rate products.  The average contract rate for 30-yearrnfixed-rate mortgages (FRM) with conforming balances of $417,500 or lessrnincreased 5 basis points to 3.67 percent, the highest rate since September 2012rnand the sixth increase in seven weeks. rnPoints decreased from 0.43 to 0.42.  The contract rate for jumbo 30-year FRM, thosernwith balances over $417,500, increased to 3.95 percent with 0.39 point fromrn3.85 percent with 0.34 point.  FHA-backedrn30-year mortgages had an average contract rate of 3.48 percent with 0.33 pointrncompared to 3.40 percent with 0.53 percent the previous week.</p

Fifteen-year FRM rates averaged 2.95rnpercent with 0.38 point.  A previous weekrnthe average rate was 2.87 percent with 0.39 point.</p

Four percent of mortgage applicationsrnwere for adjustable rate products (ARMs) of various types, a slight increasernfrom the previous week.  The contractrnrate for the most popular of these, the 5/1 hybrid mortgage, decreased to 2.60rnpercent with 0.33 point from 2.61 percent with 0.32 point.  </p

MBA’s weekly mortgage application surveyrnhas been conducted since 1990. rnRespondents include mortgage bankers, commercial banks and thrifts.  Rates are based on loans with an 80 percentrnloan-to-value ratio and points include the origination fee.  Base period and value for all indices isrnMarch 16, 1990=100.</p

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

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Refinance Index vs 30 Yr Fixed</p

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

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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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