Refis rise and purachase apps drop in latest MBA Weekly Survey

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending May 21, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10.3 percent compared with the previous week. The Refinance Index increased 17 percent from the previous week. This third consecutive increase marks the highest Refinance Index recorded in the survey since October 2009. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier and is the lowest Purchase Index observed in the survey since April 1997. The unadjusted Purchase Index decreased 4.0 percent compared with the previous week, was down 27.1 percent over the past four weeks, and was 27.5 percent lower than the same week one year ago. "Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates," said Michael Fratantoni, MBA's vice president of research and economics. "In contrast, purchase applications fell further this week, following last week's sharp decline, keeping the purchase index at 13-year lows." The four week moving average for the seasonally adjusted Market Index is up 4.4 percent. The four week moving average is down 7.2 percent for the seasonally adjusted Purchase Index, while this average is up 11.5 percent for the Refinance Index. The refinance share of mortgage activity increased to 72.2 percent of total applications from 68.1 percent the previous week, which is the highest refinance share observed in the survey since December 2009. The adjustable-rate mortgage (ARM) share of activity decreased to 6.0 percent from 6.3 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80 percent from 4.83 percent, with points remaining constant at 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed-rate recorded in the survey since the week ending Nov. 27, 2009. The effective rate also decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages increased to 4.25 percent from 4.19 percent, with points decreasing to 1.00 from 1.36 (including the origination fee) for 80 percent LTV loans. However, due to the decrease in points, the effective rate decreased from last week. The average contract interest rate for one-year ARMs increased to 6.83 percent from 6.81 percent, with points increasing to 0.38 from 0.37 (including the origination fee) for 80 percent LTV loans. For more information, visit www.mortgagebankers.org.