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Mortgage Apps: Still Much More Refi Demand Than 2 Weeks Ago

by devteam October 29th, 2014 | Share

Mortgage application numbers during the week endedrnOctober 24 backed off a bit from the numbers posted during the week endedrnOctober 17 but were still elevated compared to other recent weeks.  The Mortgage Bankers Association’s (MBA’s) WeeklyrnMortgage Applications Survey for last week reported almost entirely decliningrnnumbers but for context we will include the increases from the previous week inrnwhich there was unusually high refinancing volume. </p

MBA’s Market Composite Index, a measure of mortgagernloan application volume fell 6.6 percent on a seasonally adjusted basis fromrnthe previous week when it had posted an 11.6 percent increase.   On an unadjusted basis the Index was down 7rnpercent following a 12 percent gain.</p

The Refinancing Index was down 7 percent as well onrnthe heels of a huge 23 percent gain the previous week but refinancing retainedrnthe same 65 percent market share as the prior week.    </p

Refinance Index vs 30 Yr Fixed</p

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There had been no increases during the week endedrnOctober 17 for any of the Purchase Index numbers, all declined and did sornagainst this week.  The Purchase Index,rnboth seasonally adjusted and unadjusted, declined 5 percent and the unadjustedrnindex was 15 percent lower than during the same week in 2013.</p

Purchase Index vs 30 Yr Fixed</p

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MBA saidrnthat the seasonally adjusted purchase index was the lowest since last February</bas was the conventional purchase index and the government purchase index wasrnthe lowest since August 2007.  MBA alsornreported the following regarding government-backed loans:   rn</p<ul class="unIndentedList"<liThernFHA share of total applications increased from 8.3 percent last week to 8.9rnpercent this week. </li<liThernVA share rose from 9.6 percent to 10.7 percent. </li<liThernUSDA portion moved from 0.8 percent of applications to 0.9 percent this week. </li</ul

“Borrowersrnwith jumbo loans tend to be most sensitive to changes in rates, and thatrnsensitivity has been clearly apparent in the past few weeks with double andrneven triple digit percentage changes in refinance application volume for jumbornloans,” said Mike Fratantoni, MBA’s Chief Economist. “The average loan size forrnrefinance applications decreased to $263,600 in the most recent week from arnsurvey high of $306,400 the previous week. The decrease was driven by a 41rnpercent drop in refinance applications for loans greater than $729,000, whichrnhad surged almost 130 percent the week before.” </p

Thernaverage contract interest rate for 30-year fixed-rate mortgages (FRM) withrnconforming balances of $417,000 or less increased from 4.10 percent to 4.13rnpercent.  Points were unchanged at 0.21rnand the effective rate increased.</p

The jumbornversion of the FRM, with loan balances above $417,000, rose 10 basis points torn4.13 percent.   Points decreased to 0.13 from 0.20 and the effectivernrate rose. </p

Thernaverage interest rate for 30-year fixed-rate mortgages backed by the FHArnincreased to 3.84 percent from 3.81 percent, with points increasing to 0.16rnfrom 0.07.  The effective rate increased.</p

Fifteen-yearrnFRM had an average contract rate of 3.28 percent, unchanged from the previousrnweek.  Points increased to 0.24 from 0.22rnand the effect rate remained the same.  </p

The marketrnshare of adjustable rate mortgages (ARMs) fell back to 8.2 percent of allrnapplications during the week after establishing reaching 9.4 percent the weekrnbefore – the highest share since June 2008. rn The average contract interestrnrate for 5/1 ARMs was unchanged at 2.94 percent, Points moved to 0.43 from 0.37,rnraising the effective rate. </p

MBA’s surveyrncovers over 75 percent of all U.S. retail residential mortgage applications,rnand has been conducted since 1990. Respondents include mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes is Marchrn16, 1990=100 and interest rate information assumes a loan with an 80 percentrnloan-to-value ratio with points that include the origination fee.   

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

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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