The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 4th, 2011.

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 3.9 percent compared with the previous week.

The Refinance Index decreased 7.7 percent from the previous week.  The four week moving average is down 1.5 percent. The refinance share of mortgage activity decreased to 66.6 percent of total applications from 69.3 percent the previous week.
This is the lowest refinance share observed in the survey since the week ending May 14, 2010.

The seasonally adjusted Purchase Index decreased 1.4 percent from one week earlier.  The unadjusted Purchase Index increased 4.8 percent compared with the previous week and was 16.6 percent lower than the same week one year ago.   The four week moving average is down 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13 percent from 4.81 percent, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009.  The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29 percent from 4.13 percent, with points increasing to 1.02 from 1.01 (including the origination fee) for 80 percent LTV loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.  The effective rate also increased from last week.

"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Michael Fratantoni, MBA's Vice President of Research and Economics. "We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."