Mortgage Applications Fall as Rates Hit New Lows

by devteam December 21st, 2011 | Share

ThernMortgage Bankers Association’s (MBA) Market Composite Index decreased 2.6rnpercent on a seasonally adjusted basis during the week ended December 16.  The Index, the result of the Association’srnWeekly Mortgage Applications Survey, was down 2.8 percent from the previousrnweek on an unadjusted basis.</p

ThernRefinance Index was 1.6 percent lower for the week than during the week endedrnDecember 9 while the Purchase Index decreased 4.9 percent on a seasonallyrnadjusted basis.  On an unadjusted basisrnthe Purchase Index was down 7.5 percent compared to the previous week and 6.9rnpercent compared to the same week in 2010.</p

Thernfour week moving averages for the Market Index and the Refinance Index rose byrn0.26 percent and 1.32 percent while the moving average for the seasonallyrnadjusted Purchase Index was down 1.53 percent. </p

Applicationsrnfor refinancing garnered the highest share of total applications of the year atrn80.7 percent, up from 79.7 percent the previous week and the share ofrnapplications activity for adjustable-rate mortgages (ARM) hit its 2011 low atrn5.1 percent.  The ARM share was 5.6rnpercent the previous week.</p

DuringrnNovember loans for home purchase had an average size of $217,774 compared torn$213,430 in October.  The average size ofrna loan used for refinancing was $220,523, up from $217,153 in October.  Government guaranteed purchase loans averagedrn$170,742, a substantial decrease from the average of $186,263 in October.  The Pacific region had the highest loan sizes;rn$308,307 for purchase loans and $304,509 for refinancing. </p

Contractrninterest rates were lower for all loan types with 30-year jumbo, 15-year fixed,rnand ARMs reaching the lowest level of the year.  The effective rate for each loan type alsorndecreased.  The average rate for 30-yearrnfixed-rate mortgages (FRM) with conforming loan balances of $417,500 or lessrnwas 4.08 percent, down 4 basis points from the previous week with points,rnincluding the origination fee, increasing from 0.45 to 0.49.  Thirty-year jumbo FRM rates averaged 4.44rnpercent with 0.37 point, down from 4.47 percent with 0.45 point a week earlier.  FHA backed mortgages with a 30-yearrnfixed-rate term averaged 3.93 percent with 0.63 points compared to 3.94 percentrnwith 0.68 point.  Rates for 15-year FRMrnwere at 3.39 percent with 0.40 point from 3.44 percent with 0.52 point and thern5/1 ARM averaged 2.90 percent with 0.46 point compared to 2.93 percent withrn0.53 point.  All rates are for loans withrnan 80 percent loan to value ratio.</p

Continued anxiety surrounding the fragile economic situationrnin Europe led interest rates lower last week. However, refinance applicationsrnfell slightly, and purchase applications dropped further as we head into thernend of the year,” said Michael Fratantoni, MBA’s Vice President ofrnResearch and Economics. “Remarkably low rates are not enough, as manyrnhomeowners continue to hold back due to lack of equity in their properties,rnpoor credit and a weak job market.” </p

MBA’s WeeklyrnApplication Survey covers over 75 percent of all U.S. retail residentialrnmortgage applications, and has been conducted weekly since 1990. Respondentsrninclude mortgage bankers, commercial banks and thrifts.  Base period andrnvalue for all indexes is March 16, 1990=100.</p

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

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Refinance Index vs 30 Yr Fixed</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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