Mortgage application volume shifts as rates rise

Mortgage application volume down

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 17, 2012, mortgage application volume fell 7.4 percent from the previous week on a seasonally adjusted basis, dropping 8.0 percent on an unadjusted basis.

While the Refinance Index decreased 9.0 percent from the previous week, marking the lowest level since early July, the volume of new mortgage applications actually rose 0.9 percent during the same period. The Purchase Index came in at 3.0 percent higher than the same week in 2011. The MBA points to the slow rise of mortgage rates as the culprit for falling refinance applications, but rates remain at historic lows.

The refinance share of mortgage activity decreased to 80.0 percent of total applications from 81.0 percent the previous week, continuing to hover around the 80 percent mark as it has in recent years – no major shift here.

The HARP share of refinance activity was at 24.0 percent, unchanged from the week prior, and the adjustable-rate mortgage (ARM) share of activity increased to 4.0 percent of total applications.

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During the month of July, the investor share of applications for home purchase was at 5.7 percent, a slight increase from 5.5 percent in June, which the MBA credits an 8.7 percent gain in the Pacific region. Additionally, the share of purchase mortgages for second homes increased to 5.8 percent in July from 5.6 percent in June.

Current mortgage rates

According to the MBA:

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.86 percent from 3.76 percent, with points decreasing to 0.42 from  0.47 (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 fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.11 percent from 4.03 percent, with points increasing to 0.42 from 0.27 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.
• The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.62 percent from 3.53 percent, with points increasing to 0.50 from 0.49 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.
• The average contract interest rate for 15-year fixed-rate mortgages increased to 3.15 percent from 3.12 percent, with points increasing to 0.44 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs increased to 2.74 percent from 2.73 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.