Loan Demand Rebounds from Holiday Influenced Slowdown

by devteam March 9th, 2011 | Share

The Mortgage Bankers Association (MBA) todayrnreleased its Weekly Mortgage Applications Survey for the weekrnending March 4 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 15.5 percent on a seasonallyrnadjusted basis from one week earlier.  On an unadjusted basis, the Indexrnincreased 16.1 percent compared with the previous week.  

The Refinance Index increased 17.2 percentrnfrom the previous week and was the highest Refinance Index observed since thernweek ending January 14, 2011.  The four week moving average is up 3.6rnpercent. The refinance share of mortgage activity increased to 65.5 percent ofrntotal applications from 64.9 percent the previous week.</p

IMPORTANT NOTE: The previous week’s datarndid not include a holiday adjustment for Presidents’ Day,  the week over week percentage rebound we are seeing today was likely overstated as a result.</p


The seasonally adjusted PurchasernIndex increased 12.5 percent from one week earlier and was the highest PurchasernIndex recorded this year. The unadjusted Purchase Index increased 14.3 percentrncompared with the previous week and was 14.3 percent lower than the same weekrnone year ago. The four week moving average is up 1.2 percent for the seasonallyrnadjusted Purchase Index.</p



The average contract interest raternfor 30-year fixed-rate mortgages increased to 4.93 percent from 4.84 percent,rnwith points decreasing to 0.87 from 1.29 (including the origination fee) for 80rnpercent loan-to-value (LTV) ratio loans.  The effective rate alsornincreased from last week. </p

The average contract interest raternfor 15-year fixed-rate mortgages remained unchanged at 4.17 percent, withrnpoints increasing to 1.15 from 1.07 (including the origination fee) for 80rnpercent LTV loans. The effective rate increased from last week. </p


“Takingrninto account typical seasonal patterns, purchase applications rose to theirrnhighest level of the year last week.  On an unadjusted basis, purchasernapplication activity is the highest since last May,” said MichaelrnFratantoni, MBA’s Vice President of Research and Economics.  “Anrnimproving job market is beginning to pave the way for an improving housing market. rnAdditionally, mortgage interest rates remained below 5 percent for a secondrnweek, maintaining affordability for buyers and leading to an increase inrnrefinance applications.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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