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Mortgage application volume stagnates, purchases fall

Seasonally adjusted and unadjusted data both show mortgage application volume dropping slightly, but no major shifts took place during this reporting period.

Mortgage application volume data

According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 15, 2012, mortgage applications decreased 0.8 percent from one week earlier.

The Market Composite Index (MCI) measures mortgage loan application volume, which fell 0.8 percent on a seasonally adjusted basis from one week earlier, while on an unadjusted basis, the MCI decreased more than 1.0 percent. The Refinance Index increased 1.0 percent from the previous week and the seasonally adjusted Purchase Index fell 9.0 percent from one week earlier, falling 2.0 percent lower than the same week one year ago.

“Refinance volume increased again last week, but the composition of activity changed markedly. Despite rates remaining near all-time lows, conventional refinance application volume declined, and the HARP share of refinance activity dropped to 20 percent,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

Fratantoni continued, “On the other hand, FHA refinance volume exploded to an all-time high, more than doubling over the week. New, lower FHA premiums on streamlined refinance loans came fully into effect, and borrowers seized the opportunity to lower their mortgage rates without increasing their FHA premiums. Purchase activity fell off last week, but this is likely only a recalibration following the Memorial Day holiday, as the level of activity remains within the narrow band seen for the past 3 years.”

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The refinance share of mortgage activity increased to 81 percent of total applications from 79 percent the previous week, and the adjustable-rate mortgage (ARM) share of activity decreased to 4.0 percent of total applications.

In May, the investor share of applications for home purchase was at 6.0 percent, unchanged from the previous month, even though regions including East South Central and South Atlantic increased by 0.5 percent.

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 3.87 percent, matching the lowest rate in the history of the survey, from 3.88 percent, with points increasing to 0.49 from 0.43 (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) decreased to 4.06 percent, the lowest rate in the history of the survey, from 4.12 percent, with points decreasing to 0.38 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.72 percent from 3.71 percent, with points decreasing to 0.47 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 3.25 percent from 3.23 percent, with points decreasing to 0.45 from 0.48 (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 decreased to 2.75 percent, the lowest rate in the history of the survey, from 2.78 percent, with points decreasing to 0.33 from 0.49 (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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