Refinance Applications Down 1.4%. Purchase Index at 12 Year Low

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending November 13, 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 on loan application activity for the week ending November 6, 2009, demand for new mortgage loans increased 3.2% from one week earlier. The 30-year fixed-rate mortgage decreased to 4.90% from 4.97%. The Refinance index rose 11.3% while the Purchase index fell 11.7%, its lowest level since December of 2000.

In this week's release, which reports on loan application activity for the week ending November 13, 2009, new loan application fell 2.5%, even as the 30 year fixed-rate mortgage fell 0.7% to 4.83. The refinance index decreased 1.4% and the purchase index fell 4.7%. This is the sixth consecutive decline for the purchase index and is the lowest read since November 1997.

From the Mortgage Bankers Association...

The Market Composite Index, a measure of mortgage loan application volume decreased 2.5 percent on a seasonally adjusted basis from one week earlier. The four week moving average for the seasonally adjusted Market Index is down 1.2 percent.

The Refinance Index decreased 1.4 percent from the previous week. The four week moving average is up 1.4 percent for the Refinance Index. The refinance share of mortgage activity increased to 72.9 percent of total applications from 71.5 percent the previous week. This refinance share is the highest share since the week ending May 15, 2009.

The Purchase Index decreased 4.7 percent from one week earlier.  The four week moving average is down 5.8 percent for the seasonally adjusted Purchase Index.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.90 percent, with points increasing to 1.17 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest contract rate observed by the survey since mid-May of this year.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.32 percent from 4.33 percent, with points decreasing to 1.01 from 1.15 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.82 percent from 6.85 percent, with points decreasing to 0.28 from 0.29 (including the origination fee) for 80 percent LTV loans.