Lower Rates Spark Increase in Mortgage Applications

Mortgage applications increased almost 12 percent during the week ended November 7 compared with the week ended October 31 according to the Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association (MBA).  The increase on a seasonally adjusted basis was 11.9 percent and on an unadjusted basis was up 10.5 percent.  Compared with the same week in 2007 however, applications activity was down 40.0 percent.

The lender survey showed an average contract interest rate on 30-year fixed-rate mortgages (FRM) was 6.24 percent compared with 6.47 a week earlier.  Points including the origination fee decreased to 1.17 from 1.19.

The average interest rate for a 15-year FRM decreased to 5.90 percent from 6.14 percent and points dropped to 1.12 from 1.22.

The one-year adjustable rate mortgage (ARM) dropped a whopping 67 basis points while points held almost steady at 0.43 compared to 0.42.

Refinancing represented 45.1 percent of all mortgage applications during the week compared to 42.9 percent the week before.  Despite the big drop in the ARM rate, however, the market share of the adjustable rate product decreased to 2.3 percent of all mortgage applications from 2.5 percent a week earlier.