Refinance Demand Stabilizes as Mortgage Rates Rebound

The Mortgage Bankers Association (MBA) todayrnreleased its Weekly Mortgage Applications Survey for the weekrnending February 18th, 2011. </p

The MBA’s loan application survey covers overrn50% of all U.S. residential mortgage loan applications taken by mortgagernbankers, commercial banks, and thrifts. The data gives economists a snapshotrnview of consumer demand for mortgage loans. In a falling mortgage raternenvironment, a trend of increasing refinance applications implies consumers arernseeking out lower monthly payments. If consumers are able to reduce theirrnmonthly mortgage payment and increase disposable income through refinancing, itrncan be a positive for the economy as a whole (may boost consumer spending. Alsornallows debtors to pay down personal liabilities faster). A trend of decliningrnpurchase applications implies home buyer demand is shrinking.</p

Excerpts from the Release…</p

The Market Composite Index, a measure ofrnmortgage loan application volume, increased 13.2 percent on a seasonallyrnadjusted basis from one week earlier.  On an unadjusted basis, the Indexrnincreased 14.8 percent compared with the previous week.</p

The Refinance Index increased 17.8 percentrnfrom the previous week.   The fourrnweek moving average is up 1.8 percent. The refinance share of mortgage activityrnincreased to 65.7 percent of total applications from 64.0 percent the previousrnweek.</p

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The seasonally adjusted Purchase Indexrnincreased 5.1 percent from one week earlier. The unadjusted Purchase Indexrnincreased 9.6 percent compared with the previous week and was 6.9 percent lowerrnthan the same week one year ago.  Thernfour week moving average is up 1.6 percent for the seasonally adjusted PurchasernIndex.</p

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The average contract interest rate forrn30-year fixed-rate mortgages decreased to 5.00 percent from 5.12 percent, withrnpoints increasing to 0.97 from 0.85 (including the origination fee) for 80rnpercent loan-to-value (LTV) ratio loans.  The effective rate alsorndecreased from last week. </p

The average contract interest rate forrn15-year fixed-rate mortgages decreased to 4.28 percent from 4.34 percent, withrnpoints decreasing to 0.80 from 0.85 (including the origination fee) for 80rnpercent LTV loans. The effective rate also decreased from last week.</p

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“Ongoing turmoil in the Middle East broughtrninterest rates lower last week.  Borrowers took advantage of these lowerrnrates, bringing application activity back near levels from two weeks ago,rnfollowing sharp declines last week,” said Michael Fratantoni, MBA’s VicernPresident of Research and Economics.</p

READ MORE: OUTLOOK UPGRADED FOR MORTGAGE RATES

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