MBA survey shows refis on the rise as purchase apps dip
The Mortgage Bankers Association (MBA) has released the results of its Weekly Mortgage Applications Survey for the week ending May 28, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week. The Refinance Index increased 2.4 percent from the previous week. This was a smaller increase than in previous weeks, but was still the fourth consecutive weekly increase for the Refinance Index and it remains at its highest level since October 2009. The seasonally adjusted Purchase Index decreased 4.1 percent from one week earlier. The Purchase Index decreased for the fourth consecutive week and is currently at the lowest level since April 1997. The unadjusted Purchase Index decreased 5.2 percent compared with the previous week and was 16.8 percent lower than the same week one year ago. "With another week of historically low mortgage rates, the trend from the prior three weeks continued, as refinance applications increased while purchase applications dropped. Purchase applications are now almost 40 percent below their level four weeks ago, while the refinance share, at 74 percent, is at its highest level since December," said Michael Fratantoni, MBA's vice president of research and economics. "In addition, the ARM share dropped last week to its lowest level since March of this year, as borrowers took the opportunity to lock in at historically low fixed mortgage rates." The four-week moving average for the seasonally adjusted Market Index is up 3.5 percent. The four week moving average is down 12.1 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 73.8 percent of total applications from 72.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2 percent from 6.0 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 4.83 percent from 4.80 percent, with points decreasing to 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased slightly from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.24 percent from 4.25 percent, with points increasing to 1.11 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week due to the increase in points. The average contract interest rate for one-year ARMs increased to 6.96 percent from 6.83 percent, with points decreasing to 0.27 (including the origination fee) for 80 percent LTV loans. For more information, visit www.mortgagebankers.org.