Mortgage Applications Increase in Wake of Record Low Rates

by devteam December 12th, 2012 | Share

Record lows in interest rates werernaccompanied by an increase in mortgage refinancing activity during the weekrnended December 7.  The Mortgage BankersrnAssociation reports that its Market Composite Index, a measure of mortgage loanrnapplication volume, rose 6.2 percent on a seasonally adjusted basis from a weekrnearlier and was up 6 percent on an unadjusted basis.</p

The RefinancernIndex was up 8 percent from the previous week and at its highest level since thernweek ended October 12.  Applications forrnrefinancing had an 84 percent share of business compared to 82 percent duringrnthe week ended December 1.  Refinancingrnthrough the Home Affordable Refinance Program (HARP) accounted for 29 percentrnof refinance applications compared to 27 percent thernprior week.</p

The seasonally adjusted Purchase Index</bincreased about 1 percent and the unadjusted Purchase Index was down 4 percentrnweek-over-week but 9 percent higher than the same week in 2011.</p

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

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


Refinance Index vs 30 Yr Fixed</p

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


“Continued uncertainty due to the lack of resolutionrnregarding the fiscal cliff led interest rates lower last week, with mortgagernrates reaching a new low in our survey,” said Mike Fratantoni, MBA’s VicernPresident of Research and Economics.  “Refinance activity increased, withrnthe refinance index hitting its highest level in two months, and the refinancernshare reaching its highest level since January 2009.  Applications for purchasernincreased for a fifth consecutive week, and are running almost ten percentrnabove their level at this time last year.”</p

Both contract andrneffective rates decreased for all fixed rate products with several rates settingrnnew lows. The average contract interest rate for conforming 30-year fixed-raternmortgages (FRM) (balances of $417,500 or less)</adecreased to 3.47 percent, the lowest rate in the history of the survey, fromrn3.52 percent, and pointsrndecreased to 0.36 from 0.41.  Ratesrnfor jumbo 30-year FRM (balances greater than $417,500)<a name="MBA30J_RateDir"decreased to 3.77 percent from 3.79 percent.  Points increased to 0.35 from 0.32. </p

The contract rate for FHA-backed 30-year FRM decreased torn3.32 percent with 0.51 point, the lowest rate in the history of the survey,rnfrom 3.34 percent with 0.62 point.</p

Fifteen-yearrnfixed-rate mortgage rates declined on average by 1 basis point to 2.85 percent,rnthe lowest rate in the history of the survey. rnPoints decreased to 0.26 from 0.27</p

Adjustable raternmortgages were the only products for which rates increased. The averagerncontract interest rate for 5/1 ARMs increased torn2.63 percent from 2.62 percent,<bwith points decreasing to 0.34 from 0.40 and the effective raternincreased.   The adjustable-rate mortgagern(ARM) share of activity remained at 3 percent of total applications.</p

Rates are derived from MBA’s Weekly Mortgage Application Surveyrnwhich covers over 75 percent of all U.S. retail mortgage applications and hasrnbeen conducted since 1990.  Rates are quotedrnfor loans with an 80 percent loan-to-value ratio and points include thernorigination fee. 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 is prohibited.

About the Author


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

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...