Mortgage Applications Drop Sharply In Holiday Week

by devteam October 19th, 2011 | Share

Mortgagernapplications dropped sharply during the week ended October 14, falling 14.9rnpercent on both a seasonally adjusted and an unadjusted basis.   According to the Mortgage BankersrnAssociation (MBA), which issued its Weekly Mortgage Applications Survey, thernchange in its Market Composite Index which measures loan application volume, camernfrom losses in every sector of the market. </p

Duringrnthe week, which included Columbus Day a holiday which affects only parts of therneconomy, the Refinance Index dropped 16.6 percent from the week ended Octoberrn14 and the seasonally adjusted Purchase Index was down 8.8 percent to thernlowest level in the survey since December 1996. rnThe unadjusted Purchase Index was down 8.6 percent from the previous weekrnand 5.1 percent from the same week in 2010.  rnBoth conventional and government purchase activity were down as wellrnwith the Conventional Purchase Index decreasing 11.0 percent and the GovernmentrnPurchase Index 5.9 percent.</p

Thernindices were all down on a year-over-year basis with the exception of thernGovernment Purchase Index which increased 3.3 percent on an unadjusted basis,rnthe second straight increase.  It is nowrnat 43.5, the highest level since April 2011. rnThe four week moving average for the seasonally adjusted Market Index isrndown 2.35 percent while the moving averages for the Refinancing Index and thernseasonally adjusted Purchase Index fell 2.58 percent and 1.53 percentrnrespectively.</p

Refinancingrnapplications represented 77.6 percent of all applications for the week, downrnfrom 79.1 percent and the share of applications for adjustable-rate mortgagesrn(ARM) was 5.8 percent compared to 6.0 percent the previous week.  Purchase applications rose in the Pacificrnregion by 7 basis points to 19.6 percent while falling in every other region. </p

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

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


Refinance Index vs 30 Yr Fixed</p

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


Bothrnactual and effective interest rates rose during the week for all types of 80rnpercent loan-to-value loans.  Averagernrates for conforming 30-year fixed-rate mortgages (FRM) increased to 4.33rnpercent from 4.25 percent and points, including the origination fee, increasedrnto 0.48 from 0.47. Rates for 30-year mortgages with jumbo loan balances (overrn$417,500) increased from 4.59 percent to 4.64 percent with points decreasingrnfrom 0.49 to 0.45 point.  FHA-backedrn30-year FRM increased 6 basis points to 4.12 percent with points decreasing torn0.53 from 0.58.</p

Thernaverage rate for 15-year FRM rose from 3.53 percent to 3.61 percent with pointsrndeclining from 0.45 to 0.43 while the rate for 5/1 ARMS moved from 3.03 percentrnwith 0.54 point to 3.08 percent with 0.48 point.   </p

MBA’s surveyrncovers over 75 percent of all U.S. retail residential mortgage applications,rnand has been conducted weekly since 1990 among mortgage bankers, commercialrnbanks and thrifts.  Base period and value for all indexes is March 16,rn1990=100.</p


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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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