Mortgage applications decreased four percent from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending May 27, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased four percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4.2 percent compared with the previous week.
The Refinance Index decreased 5.7 percent from the previous week. The seasonally adjusted Purchase Index was essentially unchanged from one week earlier. The unadjusted Purchase Index decreased 1.2 percent compared with the previous week and was 7.6 percent higher than the same week one year ago.
"Interest rates fell last week as incoming economic data was weaker than anticipated. Despite this drop in rates, the number of refinance applications fell," said Mike Fratantoni, VP of research and economics for the Mortgage Bankers Association (MBA). "In fact, the last time mortgage rates were this low, refinance volume was more than 20 percent higher. It is likely that many borrowers still cannot qualify to refinance given the lack of equity in their homes."
The four week moving average for the seasonally adjusted Market Index is up three percent. The four week moving average is up 1.1 percent for the seasonally adjusted Purchase Index, while this average is up 3.8 percent for the Refinance Index. The refinance share of mortgage activity decreased to 65.7 percent of total applications from 66.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent from 5.8 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.58 percent from 4.69 percent, with points increasing to 1.01 from 0.69 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is the lowest since November 2010. The effective rate also decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.78 percent, with points increasing to 1.07 from 1.04 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.
