MBA: Refinance Loan Applications Fall 16.8%. Purchase Apps Decline 7.6%

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending October 16, 2009.

Housing is a key component of economic forecasts, thus real estate surveys and housing data are closely scrutinized by policy makers.

The Mortgage Banker's application survey covers over 50% of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates home buying interest is increasing, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, a trend of increased refinance applications implies consumers are seeking out a lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items...or just an opportunity to pay down other debts like credit cards and car loans.

In the week ending October 9, rising mortgage rates slowed the pace of new loan applications. The average 30 year fixed mortgage rate rose to 5.02% and the refinance index fell by 0.1% while the purchase index dropped 5.0%. In week prior to October 9, new application activity increased 16.4% as mortgage rates fell below 5.00% to five month lows.

In today's release, which reports on the week ending October 16, mortgage application activity fell 13.7% as mortgage rates rose from 5.02% to 5.07%.

From the Mortgage Banker's Association...

This week’s results include an adjustment to account for the Columbus Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 13.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 22.4 percent compared with the previous week.

The Refinance Index, also adjusted for the holiday, decreased 16.8 percent from the previous week.

The seasonally adjusted Purchase Index decreased 7.6 percent from one week earlier.  The unadjusted Purchase Index decreased 16.7 percent compared with the previous week and was 3.4 percent lower than the same week one year ago.

 
The four week moving average for the seasonally adjusted Market Index is down 1.0 percent.  The four week moving average is down 1.7 percent for the seasonally adjusted Purchase Index, while this average is down 0.6 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 65.0 percent of total applications from 67.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent from 6.2 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.07 percent from 5.02 percent, with points increasing to 1.13 from 1.11 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.51 percent from 4.44 percent, with points decreasing to 0.96 from 1.04 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.86 percent from 6.71 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent LTV loans.