Mortgage Applications Increase 8.2%. Refinance Demand Up 14.5%

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending October 30, 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 last week's release, which reported data for the week ending October 23, mortgage application activity fell 12.3% even as mortgage rates dropped from 5.07% to 5.04%. The Refinance Index, decreased 16.2% from the previous week while the seasonally adjusted Purchase Index moved lower as well, decreasing 5.2% from one week earlier. The refinance share of mortgage activity fell to 62.3% of total applications from 65.0% in the previous week.

In today's release, which covers new loan applications for the week ending October 30,  the MBA reported that demand for new mortgages increased 8.2% and the average 30 year fixed mortgage rates fell from 5.04% to 4.97%.

From the Mortgage Banker's Association...

The Market Composite Index, a measure of mortgage loan application volume, increased 8.2% on a seasonally adjusted basis from one week earlier.  The four week moving average for the seasonally adjusted Market Index is down 5.5%.

The seasonally adjusted Purchase Index decreased 1.8% from one week earlier. The four week moving average is down 5.0% for the seasonally adjusted Purchase Index

The Refinance Index increased 14.5% from the previous week. The four week moving average is down 5.7% for the Refinance Index. The refinance share of mortgage activity increased to 66.1% of total applications from 62.3% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.97 percent from 5.04 percent, with points decreasing to 1.01 from 1.25 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.33 percent from 4.53 percent, with points increasing to 1.33 from 0.78 (including the origination fee) for 80 percent LTV loans.  The average contract interest rate for one-year ARMs increased to 6.83 percent from 6.79 percent, with points increasing to 0.31 from 0.29 (including the origination fee) for 80 percent LTV loans.

Survey results for the week ending November 6th will be released on Thursday, November 12th due to the Veterans' Day holiday on Wednesday, November 11th.