The pending increase in FHA guarantee fees pushed applications for government-backed purchase mortgages up 7 percent butt the overall volume of mortgage activity dropped during the week ended March 29. There was a 4.0 percent drop in the Mortgage Bankers Association's (MBA) Market Composite Index compared to the week ended March 22 on both a seasonally adjusted and an unadjusted basis.
Despite the surge in government-backed mortgage activity the overall volume of applications for financing home purchases was up only 1 percent on an adjusted basis from the previous week and up 2 percent on an unadjusted basis. The unadjusted Purchase Index was 4 percent higher than during the same week one year earlier.
The Refinance Index decreased 6 percent from the previous week and the share of refinancing applications decreased to 74 percent of total applications from 75 percent the previous week. The Home Affordable Refinance Program (HARP) accounted for 28 percent of refinancing compared to 29 percent the previous week.
"Total purchase applications increased last week, due to an almost 7 percent increase in purchase applications for government loans. This was likely driven by borrowers applying for loans prior to the scheduled increase in FHA premiums that took effect on April 1," said Mike Fratantoni, MBA's Vice President of Research and Economics. "On a year over year basis, purchase applications are up about 4 percent, in line with the trend we are seeing in home sales volumes."
Purchase Index vs 30 Yr Fixed
Refinance Index vs 30 Yr Fixed
Both contract and effective interest rates for all fixed-rate mortgage (FRM) products decreased during the week. The average contract interest rate for 30-year FRM with conforming loan balances ($417,500 or less) decreased to 3.76 percent from 3.79 percent, with points decreasing to 0.43 from 0.44. Average rates for the jumbo version of the 30-year FRM (loan balances in excess of $417,500) fell 5 basis points to 3.85 percent with points decreasing to 0.37 from 0.42.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.48 percent from 3.51 percent, with points decreasing to 0.38 from 0.43.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.99 percent with 0.36 point from from 3.02 percent, with 0.42 point
Five percent of mortgage applications during the week were for adjustable rate mortgages (ARM), unchanged from the previous week. The average contract interest rate for 5/1 ARMs, the most popular of these products, increased to 2.60 percent from 2.58 percent, with points unchanged at 0.32 and the effective rate increased
Rates quoted are for loans with an 80 percent loan to value ration and points include the origination fee.
Mortgage volume and interest rate data is collected by MBA from its Weekly Mortgage Applications Survey which it has conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
