Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Housing News

Mortgage application volume dips despite rock bottom interest rates

Last week, mortgage application volume made healthy gains for the first time in several weeks, but volume again slipped this week despite continued low interest rates. Meanwhile government agencies fight over principal reductions and banks begin paying out on the $25 billion mortgage settlement.

Mortgage application volume down again

After six weeks of decreasing mortgage application volume for new purchases and refinances, last week saw a slight uptick which has been tamped down by this week’s report from the Mortgage Banker’s Association (MBA) who says applications fell 2.4 percent last week from the week prior.

The MBA notes that there were no adjustments made for Good Friday and that the four week moving average for the seasonally adjusted Market Index is down 2.08 percent. The four week moving average is up 2.19 percent for the seasonally adjusted Purchase Index, while this average is down 3.45 percent for the Refinance Index.

Breakdown of volume share

For the eight week in a row, refinance volume dropped, resting at 70.5 percent of the total applications, the lowest share since July 2011. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.5 percent of total applications from the previous week.

In March 2012, the share of applications for investment properties rose from 7.4 percent in february to 8.3 percent, which the MBA says was driven by refinance applications for investment homes falling for the month.

Advertisement. Scroll to continue reading.

Interest rates

According to the MBA:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.10 percent from 4.16 percent, with points remaining unchanged at 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This is the lowest 30-year fixed rate since March 9, 2012. The effective rate 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 4.43 percent from 4.46 percent, with points decreasing to 0.36 from 0.49 (including the origination fee) for 80 percent LTV loans. This is the lowest 30-year jumbo rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.87 percent from 3.89 percent, with points decreasing to 0.55 from 0.58 (including the origination fee) for 80 percent LTV loans. This is the lowest FHA rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.37 percent from 3.40 percent, with points decreasing to 0.37 from 0.41 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed rate since March 9, 2012. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 2.89 percent from 2.93 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent LTV loans. This is the lowest 5/1 ARM rate since March 9, 2012. The effective rate decreased from last week.

Timing coincides with principal reduction talks

As housing leaders continue to argue over whether or not banks should give mortgage debt forgiveness, mortgage application volume has fallen in recent weeks. Some project that mortgage activity will increase as they traditionally do during the spring, but as lending remains tight and the big servicers readjust to paying $25 billion per terms of the national settlement with federal and state agencies, with some lenders like Ally pulling out of mortgages altogether.

The MBA is not offering any predictions this week, but the reduced volume of mortgage applications and refinances is troubling as real estate sales and housing prices continue to slip.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

14 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Business News

(FINANCE) An anti-trust lawsuit against major players in the residential real estate industry sheds light on misinformation and misunderstandings about commissions - when you're...

Business Marketing

(MARKETING) Opcity is the Austin startup making big changes to the ways that lead generation happens in real estate.

Business News

(REAL ESTATE NEWS) NAR CEO Dale Stinton is set to retire after his successor is named. Stinton is known for his steady leadership and...

Austin

When looking to buy a home, taking the long view is important before making such a huge investment - where are the best places...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.