The volume of mortgage applications declined 1.2 percent on a seasonally adjusted basis during the week ended November 18 according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.   The Market Composite Index, a measure of application volume increased 8.6 percent on an unadjusted basis when compared to the previous week (which included the Veterans Day holiday) and was 4.8 percent lower than the same week in 2010.

The Refinance Index decreased 4.0 percent from the previous week to its lowest level since mid-August while the seasonally adjusted Purchase Index rose 8.2 percent.  The unadjusted Purchase Index increased 15.2 percent week-over-week and 4.8 percent from one year earlier.

The four-week moving averages for the indices were mixed; down 0.42 percent for the seasonally adjusted Market Index, 1.39 percent for the Refinance Index, and up 3.08 percent for the seasonally adjusted Purchase Index.

Applications for refinancing constituted 75.9 percent of all applications, down from 77.3 percent during the week ended November 11 and the lowest share since September 9.  5.7 percent of applications were for adjustable rate mortgages (ARMs) compared to 6.1 percent the previous week. 

Applications for government related refinancing during the week increased to 13.0 percent from 11.8 percent and was the highest level of applications for government refinancing since April.  Statistics for the month of October also showed an increase in government refinancing applications, representing 12.3 percent of all refinancing applications for the month, the highest level since MBA started tracking this data in January.   The government share of purchase activity increased 0.5 percent in October to 42.9 percent.

"Purchase applications increased last week, returning to levels from before the Veteran's Day holiday," said Michael Fratantoni, MBA's Vice President of Research and Economics. "However, purchase activity remains almost 5 percent below last year's level. Overall, refinance activity dropped for the week, but there was an increase in refinance applications for government loan programs."

 Activity was greatest in the West South Central and East South Central regions where application volume was up 17.2 and 17.9 percent respectively.  Those two regions also had the greatest government refinance activity in October with increases of 2.1 percent and 2.0 percent over September.   The government share of purchase activity was greatest in the East North Central and East South Central regions (48.8 percent and 50.9 percent) while activity increased the most from September to October in the Mountain (+2.0 percent) and Pacific (+2.1 percent) regions.  

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Interest rates were relatively flat with the average rate for 30-year fixed-rate mortgages (FRM) with conforming balances of 417,500 or less unchanged at 4.23 percent while points decreased from 0.52 to 0.46.  The effective rate decreased.  The average 15-year conforming FRM rate was up 4 basis points to 3.58 percent with points increasing to 0.53 from 0.47.  The effective rate increased.

Thirty-year FRM backed by FHA had an average rate of 4.05 percent with 0.55 point compared to 4.03 percent with 0.59 point the previous week.  The effective rate increased. Loans with jumbo balances (over $417,500) increased from 4.56 percent with 0.46 point to 4.59 percent with 0.40 point.  The effective rate increased.

The average contract interest rate for 5/1 ARMs dipped one basis point to 3.00 percent with points unchanged at 0.49. This is the lowest average contract interest rate for the 5/1 ARM since September 23, 2011. The effective rate also decreased from last week.

All rates are for loans with 80 percent loan-to-value ratios and all points quoted include origination fees.

MBA's weekly survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.