The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey* for the week ending July 29, 2011.
Excerpts from the Release...
The Market Composite Index, a measure of mortgage loan application volume, increased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7.0 percent compared with the previous week. The four week moving average is up 2.8 percent.
The Refinance Index increased 7.8 percent from the previous week. The four week moving average is up 4.2 percent.
The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 5.2 percent compared with the previous week and was 5.9 percent higher than the same week one year ago. The four week moving average is down 0.4 percent.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.45 percent from 4.57 percent, with points decreasing to 0.78 from 1.14 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week. Both the contract rate and effective rate for 30-year fixed rate mortgages are at their lowest levels since November 5, 2010.
The average contract interest rate for 15-year fixed-rate mortgages
decreased to 3.52 percent from 3.67 percent, with points decreasing to 1.02
from 1.08 (including the origination fee) for 80 percent LTV loans. The
effective rate also decreased from last week. Both the contract rate and the
effective rate for 15-year fixed rate mortgages are the lowest since the survey
began in 1990.
The refinance share of mortgage activity increased to 70.1 percent of total
applications from 69.6 percent the previous week. The adjustable-rate mortgage
(ARM) share of activity increased to 6.6 percent from 6.1 percent of total
applications from the previous week.
"Treasury rates plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth," said Michael Fratantoni, MBA's Vice President of Research and Economics. "Mortgage rates fell, with the rate on 15-year mortgages reaching a new low in our survey. Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year's level. Factors such as negative equity and a weak job market continue to constrain borrowers. Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards."
CHART OF MOST CURRENT MORTGAGE RATE QUOTES
* ABOUT: 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. It also allows debtors to pay down personal liabilities faster. A trend of declining purchase applications implies home buyer demand is shrinking.
