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Housing News

Mortgage application volume slips, the culprit is refinancing

Despite continued low interest rates, the Mortgage Bankers Association is reporting a weekly reduction in application volume, as they predicted would happen.

signing mortgage

signing mortgage

Refis down, as predicted

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 26, 2012, mortgage applications decreased 4.8 percent from one week earlier, with the the main culprit being a slow down in refinances, as the MBA forecast they would continue to do.

The Refinance Index decreased 6 percent from the previous week to the lowest level since the end of August. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index declined 0.3 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 80 percent of total applications from 81 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4 percent of total applications.

Contract interest rates

According to the MBA:

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  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.65 percent from 3.63 percent, with points decreasing to 0.39 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The 30-year fixed contract rate is at the highest level since mid-September.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.94 percent from 3.85 percent, with points decreasing to 0.36 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The 30-year jumbo contract rate is at the highest level since mid-September.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.41 percent, with points increasing to 0.76 from 0.61 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The FHA contract rate is at the highest level since the end of September.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.95 percent from 2.96 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 2.66 percent from 2.72 percent, with points remaining unchanged at 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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.

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