Rates Mixed but Still at Historic Lows – Application Volume Down

by devteam October 5th, 2011 | Share

The Mortgage Bankers Association’s (MBA’s)rnMarket Composite Index, a measure of mortgage loan application volume, fell 4.3rnpercent on a seasonally adjusted basis during the week ended September 30.  Unadjusted, the Index was down 4.5 percentrnfrom the week ended September 23.</p

The Refinance Index and the seasonallyrnadjusted Purchase Index fell by 5.2 percent and 0.8 percent respectively.  On an unadjusted basis the Purchase Index wasrndown 1.7 percent week-over-week and was 12.1 percent lower than during the samernweek in 2010.</p

Four week moving averages rose 2.44rnpercent for the seasonally adjusted Market Index and 3.24 percent for thernRefinance Index.  The moving average forrnthe seasonally adjusted Purchase Index lost 0.33 percent. </p

Refinancing as a share of allrnapplications decreased 6 basis points to 79.1 percent and the adjustable raternmortgage (ARM) share ticked up from 6.1 percent to 6.4 percent.</p

Looking back at monthly figures forrnAugust, MBA reported that 50.7 percent of borrowers who were refinancingrnapplied for 30-year fixed-rate mortgages (FRM); 7.1 percent chose ARMs.  Thirty-one percent chose 15-year FRM, thernhighest recorded since MBA changed their reporting metrics last January.  Those purchasing a home chose a 30-year FRMrnin 90.1 percent of cases; 7.7 percent applied for a15-year FRM and 6.6 percentrnpicked an ARM.  </p

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

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


Refinance Index vs 30 Yr Fixed</p

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


Duringrnthe week just ended the average contract interest rate for 30-year conforming FRMrnwas 4.18 percent compared to 4.24 percent the previous week.  Points, including the origination feernincreased to 0.44 from 0.36. The average rate for jumbo 30-year FRMs (thosernwith loan balances exceeding $417,500) decreased from 4.53 percent to 4.49 percentrnwith points increasing to 0.41 from 0.39. rnThe effective rate decreased for both conforming and jumbo balancernloans.  </p

Thernrate for a 15-year FRM was 3.49 percent with 0.45 point compared to 3.46 withrn0.48 point the previous week.  Therneffective rate increased.  </p

A 5/1rnARM carried an average rate of 3.02 percent 0.41 point during the week.  The previous week the rate was 2.95 percentrnwith 0.50 point.  The effective raternincreased.</p

Thernaverage contract interest rate for 30-yearrnfixed-rate mortgages backed by the FHA  decreased to 4.05 percent from 4.06 percent, with points increasing to 0.69 from 0.42.  All rates are for 80 percent loan-to-value ratiornloans. </p

“Interestrnrates continued to fall last week, driven by the latest Federal Reserve actionsrnto invest in longer-term Treasury and mortgage securities, but potentialrnborrowers largely remained on the sidelines, seemingly unimpressed by thernlowest (by any measure) mortgage rates since the 1940s,” said MikernFratantoni, MBA’s Vice President of Research and Economics. “Refinancernapplication volume declined and purchase volume was little changed. Purchasernborrowers continue to value the government lending programs that permit lowerrndown payments. The government share of purchase applications decreased slightlyrnto 41.6 percent last week, and while this is down from a recent peak of 50.4rnpercent in April 2010, it is still well above the pre-2009 survey average ofrn23.6 percent. Many refinance borrowers are opting to deleverage by moving to arn15-year term, with this product accounting for 27.0 percent of refinance volumernlast week.”

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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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