Refi Volume Drops to Lowest Level in Two Years
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Refi Volume Drops to Lowest Level in Two Years

June 26, 2013

Mortgage applications decreased three percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 21, 2013. The Market Composite Index, a measure of mortgage loan application volume, decreased three percent on a seasonally adjusted basis from one week earlier to the lowest level since November 2011. On an unadjusted basis, the Index decreased three percent compared with the previous week. The Refinance Index decreased five percent from the previous week to the lowest level since November 2011. The seasonally adjusted Purchase Index increased two percent from one week earlier. The unadjusted Purchase Index increased one percent compared with the previous week and was 16 percent higher than the same week one year ago.
“Interest rates moved up sharply following the Federal Reserve press conference last Wednesday where it was indicated that the Fed could begin tapering their asset purchases later this year,” said Mike Fratantoni, MBA’s vice president of research and economics. “Mortgage rates increased by the most in a single week since 2011, and refinance application volume dropped to its lowest level in almost two years. However, applications for conventional purchase loans picked up by more than three percent over the week, and total purchase applications were 16 percent higher than one year ago, indicating that homebuyers are not yet dissuaded by the increase in mortgage rates. Government purchase applications dropped again, likely a function of the recent increase in FHA mortgage insurance (MI) premiums.”
The refinance share of mortgage activity decreased to 67 percent of total applications, the lowest level since July 2011, from 69 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to seven percent of total applications. The government share of purchase applications dropped to 28 percent, the lowest level in the history of this series. The Home Affordable Refinance Program (HARP) share of refinance applications fell from 31 percent the prior week to 30 percent.
The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,500 or less) increased to 4.46 percent, the highest rate since August 2011, from 4.17 percent, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,500) increased to 4.52 percent, the highest rate since March 2012, from 4.23 percent, with points decreasing to 0.28 from 0.34 (including the origination fee) for 80 percent LTVs. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs backed by the FHA increased to 4.20 percent, the highest rate since August 2011, from 3.85 percent, with points increasing to 0.40 from 0.22 (including the origination fee) for 80 percent LTVs. The effective rate increased from last week.
The average contract interest rate for 15-year FRMs increased to 3.55 percent, the highest rate since November 2011, from 3.30 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent LTVs. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 3.06 percent, the highest rate since October 2011, from 2.81 percent, with points increasing to 0.39 from 0.35 (including the origination fee) for 80 percent LTVs. The effective rate increased from last week.

Originations, Residential, Marketing, Trends