Mortgage Applications Fall as Average Rates Rise

The volume of mortgage applications both for purchasing and refinancing declined slightly during the week ended August 3.  The Mortgage Bankers Association (MBA) said this morning that its seasonally adjusted Market Composite Index which measures that volume was down 1.8 percent from the level a week earlier  On an unadjusted basis the Index decreased 2 percent.

After a strong showing for several weeks the Refinance Index fell 2 percent although, with the decline in purchase applications those for refinancing maintained the same 81 percent share they held during the week ended July 27.  Applications for purchase mortgages slipped 1 percent on a seasonally adjusted basis while the unadjusted index was down 2 percent compared to the previous week and was 12 percent lower than in the same period in 2011.  

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Interest rates for longer term mortgages rose slightly during the week.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,500 or less increased to 3.76 percent with 0.46 point from 3.75 percent with 0.51 point but the effective rate of the mortgages decreased from the previous week.

Jumbo 30-year FRM - loans with balances over $417,500 - had an average rate increase from 4.01 percent with 0.32 point to 4.04 percent with 0.35 point and the effective rate also increased. 

FHA-backed 30-year FRM had an average rate of 3.54 percent compared to 3.52 percent the previous week with points decreasing to 0.49 from 0.55.  The effective rate also increased.

The rate for 15-year FRM decreased to 3.08 from 3.09 percent and points were down to 0.41 from 0.49.  The effective rate was also down.  

The adjustable rate mortgage (ARM) share of application activity decreased to 4.0 percent from the previous week when it had a 4.1 percent share.  The rate for 5/1 ARMs decreased to 2.72 percent from 2.73 percent with points decreasing to 0.40 from 0.41 and the effective rate decreased.

All rates quoted are for 80 percent loan-to-value ratio loans and the points include an origination fee.

 The Market Composite Index is based on the results of the MBA's Weekly Mortgage Application survey which has been conducted since 1990.  The survey covers over 75 percent of all U.S. retail residential mortgage applications with respondents representing mortgage bankers, commercial banks, and thrifts.  Base period and value for all indexes is March 16, 1990=100.