Refi Apps Technically Higher, But Bouncing Along The Gutter Overall

The take-away from the Mortgage Bankers Association’s (MBA’s) current pressrnrelease on mortgage volume was its summary of performance over the last twornweeks.  MBA reported a net drop in itsrnseasonally adjusted Purchase Index of 1.4 percent from the week ended June 26rnwhile its Refinance Index increased 6.5 percent.</p

That aside is necessary because the week ended July 10 followed a weekrnshortened by a holiday. The holiday and consumer reaction to it often make datarnfor both that week and the week following it an exercise in confusion with bothrnbig variations between seasonally adjusted and unadjusted data within the shortrnweek and atypical swings in component indices from one week to the next.  For example, during the Independence Day weekrnof July 3 there was a more than 10 percentage point gulf between MBA’s MarketrnComposite Index on a seasonally adjusted basis (+4.6 percent) and whenrnunadjusted (-6 percent).  There was thenrna rebound creating a comparable difference in the most recent data. </p

For the week ended July 10 the MBA reported that its Composite Index wasrndown 1.9 percent on a seasonally adjusted basis but increased 9 pointsrnunadjusted.  The RefinancernIndex rose 4 percentrnfrom the week ended July 3 and refinancing’s share of applicationrnactivity increased to 50.8 percent from 48 percent the previous week. </p

The seasonally adjusted Purchase Index wasrndown 8 percent from one week earlier while it increased 3 percentrnunadjusted.  The unadjusted index was 17 percent higher than the same week one year ago. </p

Refinance Index vs 30 Yr Fixed</p

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Purchase Index vs 30 Yr Fixed</p

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The FHA share of total applicationsrnincreased to 13.8 percent from 13.7 percent the previous week while VA and USDArnshares remained unchanged at 10.8 percent and 0.9 percent respectively. </p

Therernwas little movement in contract interest rates for fixed rate mortgages (FRM) duringrnthe week but effective rates all increased. The average contract rate forrn30-year FRM with conforming loan balances of $417,000 or less was unchanged at<b4.23 percent.  Points increased to 0.39rnfrom 0.37.  The jumbo 30-year FRMrn(balances above $417,000) carried a 4.20 contract rate compared to 4.18 percentrnthe previous week.  Points declined fromrn0.30 to 0.28.</p

Contractrnrates for 30-year FRM backed by FHA had an average increase of 1 basis point torn4.02 percent.  Points increased to 0.26rnfrom 0.18.</p

Thernrate for 15-year FRM was an average of 3.43 percent compared to 3.41 percent arnweek earlier.  Points rose to 0.33 fromrn0.31.</p

Thernshare of applications that were for adjustable rate mortgages (ARMs) increasedrnfor the week from 7.1 percent to 7.4 percent. rnThe average contract rate for 5/1 ARMS jumped 10 basis points to 3.13rnpercent.  Points increased to 0.42 fromrn0.37. </p

MBA’s data is compiled from a WeeklyrnMortgage Application Survey it has conducted since 1990.  The surveyrncovers over 75 percent of all U.S. retail residential mortgage applicationsrnwith respondents that include mortgage bankers,rncommercial banks and thrifts. Base period and value for all indexes isrnMarch 16, 1990=100.  Interest rate information assumes a mortgagernwith an 80 percent loan to value ratio and points that include the originationrnfee.

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