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Purchase Applications Highest Since Homebuyer Tax Credit, Despite Significant Drop in Government Applications
Applications for government-backedrnmortgages dropped significantly during the week ended April 5, but mortgagernactivity in other sectors was strong. rnThe Mortgage Bankers Association’s (MBA) Market Composite Index, arnmeasure of application volume, increased 4.5 percent on a seasonally adjustedrnbasis from the week ended March 29 and 5 percent on an adjusted basis.</p
Mike Fratantoni, MBA Vice Presidentrnof Research and Economics noted that there had been a significant divergence</bbetween the conventional and government markets during the week. "Following the April 1 increase in FHArnmortgage insurance premiums, government purchase applications fell by almost 14rnpercent, to their lowest level since February 2013. On the other hand,rnapplications for conventional purchase loans increased by more than 5 percent,rnbringing the conventional purchase index to its highest level since Octoberrn2009 and the highest level since the expiration of the homebuyer taxrncredit. With these changes, the government share of all purchase loansrnfell to 30 percent, the lowest level since we began tracking this series inrn2011."</p
The increase in conventional purchase mortgage applications</bwas not enough to offset the FHA effect however, and both the seasonallyrnadjusted and the unadjusted Purchase Index decreased 1 percent from thernprevious week although the seasonally adjusted index was 3 percent higher than inrnthe same week in 2012. </p
ThernRefinance Index was up 6 percent from the previous week and the refinance sharernof mortgage activity increased to 75 percent of total applications from 74rnpercent. Thirty percent of applications for refinancing were for HomernAffordable Refinance Program (HARP) mortgages compared to 28 percent thernprevious week.</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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MBA’srnWeekly Mortgage Application Survey also captured average interest rates forrnloans with an 80 percent loan-to-value ratio. rnContract rates for all fixed -rate mortgages declined to their lowestrnrates since January and effective rates were down for all productsrnsurveyed. </p
Thernaverage contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loanrnbalances ($417,500 or less) decreased to 3.68 percent from 3.76 percent,<bwith points, which in all cases includedrnthe origination fee, remaining unchanged at 0.43. The rate for 30-yearrnFRM with jumbo loan balances (greater than $417,500) decreased to 3.79 percent,rnfrom 3.85 percent, with points decreasing to 0.36 from 0.37. </p
Contract rates for 30-year FHA-backed FRM dropped 5 basis points to 3.43 percent while pointsrnjumped to 0.52 from 0.38. </p
The 15-year FRM had an average contract rate of 2.92rnpercent with 0.34 point compared to 2.99 percent with 0.36 point one week earlier.rn </p
Thernaverage contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 2.58 percent from 2.60 percent, withrnpoints increasing to 0.37 from 0.32. The ARM share of the market eased slightly torn5 percent of total applications. </p
MBA’s weekly survey, which has been conducted since 1990, coversrnover 75 percent of all U.S. retail residential mortgage applications. Respondentsrninclude mortgage bankers, commercial banks and thrifts. Base period andrnvalue for all indexes is March 16, 1990=100.
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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