Mortgage Applications Increase as Interest Rates Continue Decline

May 11, 2011 (Chris Moore)

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 6, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 8.2 percent on a seasonally adjusted basis from last week as both purchase applications and refinance applications increased on the heels of the lowest mortgage rates seen this year.

On an unadjusted basis, the Index increased 8.3 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 2.9 percent.

The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier. The four week moving average is up 0.4 percent for the seasonally adjusted Purchase Index. The unadjusted Purchase Index increased 7.1 percent compared with the previous week and was 25.8 percent lower than the same week one year ago.

“Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program. The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points,” said Michael Fratantoni, MBA’s Vice President of Research. “Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall.”

The Refinance Index increased 9.0 percent from the previous week. The four week moving average is up 4.3 percent.

The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.7 percent last week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent from 6.7 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.76 percent last week, with points decreasing to 1.10 from 0.75 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.81 percent from 3.96 percent last week, with points decreasing to 1.05 from 0.82 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

Tags: MBA, home purchase applications, mortgage rates, fixed rate mortgage, adjustable rate mortgage, refinance, interest rate

Sources:
MBA