Refinance Activity Increases as Rates Hit Survey Lows - MBA (Washington DC)

Mortgage applications increased 7.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2012.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8.7 percent compared with the previous week. The Refinance Index increased 9.4 percent from the previous week. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 4.1 percent lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 4.88 percent. The four week moving average is up 0.65 percent for the seasonally adjusted Purchase Index, while this average is up 5.72 percent for the Refinance Index.

The refinance share of mortgage activity increased to 80.5 percent of total applications from 80.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.0 percent from 5.6 percent of total applications from the previous week.

During the month of January, the investor share of applications for home purchase was at 6.4 percent, a decrease from 6.9 percent in December. This change was led by a decline in the West and East North Central regions. In addition, the share of purchase mortgages for second homes increased to 5.9 percent in January from 5.4 percent in December.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.05 percent, the lowest rate in the history of the survey, from 4.09 percent, with points increasing to 0.44 from 0.41 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.29 percent, the lowest rate in the history of the survey, from 4.33 percent, with points increasing to 0.43 from 0.41 (including the origination fee) for 80 percent LTV ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.89 percent, the lowest rate in the history of the survey, from 3.96 percent, with points increasing to 0.78 from 0.61 (including the origination fee) for 80 percent LTV ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33 percent, the lowest rate in the history of the survey, from 3.36 percent, with points decreasing to 0.37 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.91 percent from 2.94 percent, with points increasing to 0.40 from 0.39 (including the origination fee) for 80 percent LTV ratio loans. The effective rate also decreased from last week.

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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.