Loan Application Activity: Refinances Down 9.5%. Purchases Up 9.6%

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending November 20, 2009.

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 demand  for the week ending November 13, 2009, new loan applications decreased 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 was the sixth consecutive decline for the purchase index and is the lowest read since November 1997.

In this week's report, new loan application activity decreased 4.5% as the Refinance Index  fell 9.5% from the previous week. Offsetting some of the overall decline was a 9.6% increase in purchase applications. However, as refinance loans currently make up 71.7% of all mortgage applications, the  rise in purchase activity was not large enough to counterbalance the overall Market Composite Index. The MBA also reported that the average rate on a conventional 30 year mortgage moved 0.01% lower to 4.82%.

From the Mortgage Banker's Association...

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.5 percent on a seasonally adjusted basis from one week earlier. The four week moving average for the seasonally adjusted Market Index is up 0.5 percent.

The Refinance Index decreased 9.5 percent from the previous week. The four week moving average is up 4.0 percent for the Refinance Index. The refinance share of mortgage activity decreased to 71.7 percent of total applications from 74.6 percent the previous week.

The seasonally adjusted Purchase Index increased 9.6 percent from one week earlier.  The four week moving average is down 6.4 percent for the seasonally adjusted Purchase Index

 

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.82 percent from 4.83 percent, with points increasing to 1.19 from 1.18 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages remained flat at 4.32 percent, with points increasing to 1.05 from 1.01 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.66 percent from 6.85 percent, with points increasing to 0.33 from 0.29 (including the origination fee) for 80 percent LTV loans.

 

MBA NOTE: The survey results released last week for the week ending November 13, 2009 were revised and the changes reported in this week's results reflect that revision. One participant revised its data submission to show higher application volume, as well as a reclassification of some loans from purchase to refinance. As a result, the revised purchase application number is slightly lower than what was reported and the revised refinance number modestly higher.