MBA: Mortgage Applications Fall as Rates Reach New Historic Lows

by devteam May 30th, 2012 | Share

Despite another round of new interest rate lows the volume of mortgage applications decreased slightly during the pre-holiday week ended May 25.  The Weekly Mortgage applications Survey conducted by the Mortgage Bankers Association (MBA) provided the results which were not adjusted to account for any early closings on the Friday before the long weekend.</p

The Market Composite Index which measures the volume of all mortgage loan applications decreased 1.3 percent on a seasonally adjusted basis and 1.6 percent on an unadjusted basis from the week ended May 18.  The seasonally adjusted Purchase Index was down 1.6 percent and the unadjusted Purchase Index decreased 1.8 percent from a week earlier and was 3.9 percent below its level one year earlier.  </p

The Refinance Index decreased 1.5 percent from the previous week.  Refinancing represented a 76.6 percent share of all application activity, unchanged from the previous week.</p

The four week moving average of the Market Index was up 3.23 percent and the average for the Refinance Index rose 4.36 percent.  The moving average for the seasonally adjusted Purchase Index lost 0.67 percent.</p

Purchase Index vs 30 Yr Fixed</b</p

ChartManager.loadChart(‘purchaseappschart’, ‘PurchaseMtgAppChart’);


Refinance Index vs 30 Yr Fixed</p

ChartManager.loadChart(‘refiappschart’, ‘RefiMtgAppChart’);


Interest rates continued to set historic new lows.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,500 or less dropped 2 basis points to 3.91 percent, the lowest rate in the history of the MBA survey, with points increasing to 0.46 from 0.39.  The effective rate increased for the 30-year FRM but decreased for all of the other rates quoted below.  </p

The rate for 30-year FRM with jumbo balances (greater than $417,500) decreased from 4.25 percent with 0.42 point to 4.23 percent with 0.40 point.  </p

FHA-backed 30-year FRM reached a new low of 3.70 percent with 0.59 point compared to 3.73 percent with 0.57 point the previous week.  </p

The 15-year FRM was at an average rate of 3.23 percent, another record low, with 0.39 point.  A week earlier the rate was 3.26 percent with 0.42 point.  </p

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 2.77 percent, the lowest rate in the history of the survey, from 2.83 percent, with points decreasing to 0.38 from 0.42. The (ARM) share of overall activity decreased to 4.9 percent from 5.0 percent compared to the previous week.</p

All rates quoted are for 80 percent loan-to-value ratio loans and points include the application fee.</p

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100. 

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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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