Refinance Applications Surge 26.4% as Rates Set New Lows

by devteam January 18th, 2012 | Share

Mortgage applications jumped 23.1rnpercent on a seasonally adjusted basis during the week ended January 13,rn2012.  The increase in the MarketrnComposite Index, a measure of loan application volume maintained by thernMortgage Bankers Association (MBA) reflected improvements in both the purchasernand refinance business following the traditionally slow Christmas and New Yearrnholiday period.  On an unadjusted basisrnthe index increased 38.1 percent.</p

The Refinance Index increased 26.4rnpercent from the week ended January 6 to its highest point since August 8,rn2011.  The seasonally adjusted PurchasernIndex rose 10.3 percent, returning to pre-holiday levels.  The unadjusted Purchase Index was up 28.4rnpercent from the previous week and was 2.2 percent higher than during the samernweek in 2011.</p

The four-week moving average for eachrnindex also increased; the Composite Index increased by 5.99 percent, thernseasonally adjusted Purchase Index by 1.96 percent and the Refinance Index byrn7.0 percent.</p

Refinancing took an 82.2 percent sharernof all application activity, up from 80.8 percent the previous week and thernhighest share since October 22, 2010.  Applicationsrnfor adjustable rate mortgages (ARMs) constituted represented a 5.6 percentrnshare of applications, up two basis points from the previous week.</p

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

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


Refinance Index vs 30 Yr Fixed</p

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


 “Interestrnrates dropped last week due to continuing anxieties regarding the fragilerneconomic situation in Europe,” said Michael Fratantoni, MBA’s VicernPresident of Research and Economics.  “With mortgage rates reachingrnnew lows, refinance volume jumped and MBA’s refinance index reached its highestrnlevel in the last six months.  Purchase activity also increased as buyersrnreturned to the market after the holiday season.”</p

Withrnthe exception of jumbo loans (with balances over $417,500) interest rates continuedrntheir downward trend. Three of the rates, in fact, hit the lowest level in thernhistory of the MBA applications survey.  Thernjumbo rate – for 30-year fixed-rate (FRM) loans – increased to 4.40 percentrnfrom 4.34 percent with points decreasing to 0.37 from 0.47 point.  The effective rate also increased. </p

Thirty-yearrnFRM with conforming (under $417,500) balances hit a new low, decreasing to 4.06rnpercent with 0.48 point from 4.11 percent with 0.41 point. The effective raternalso decreased. </p

Ratesrnfor FHA guaranteed 30-year FRM werernat 3.91 percent with 0.59 point, the lowest FHArnrate in the history of MBA’s application survey, down from 3.96 percent with 0.72 point.  The effective rate also decreased from the previous week. </p

Thernthird all-time low is the 3.33 percent rate with 0.39 point for the 15-year FRM. rnThis was a drop from 3.40 percent with 0.37 point rate the previous week.  The effective rate also decreased.</p

Thernaverage contract interest rate for 5/1rnARMs was unchanged at the record low 2.90 percent established the previousrnweek.  Points decreased to 0.45 from 0.49.   Therneffective rate also decreased from last week. </p

Allrnrates quoted are for 80 percent loan-to-value originations and points includernthe application fee.</p

 MBA’s coversrnover 75 percent of all U.S. retail residential mortgage applications, and hasrnbeen conducted weekly since 1990.  Respondents include mortgage bankers,rncommercial banks and thrifts.  Base period and value for all indexes isrnMarch 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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