Lower Rates send Refi Activity back to January Levels

Applications for refinancing increased during the week ended April 26 driving the Mortgage Bankers Association's (MBA) Market Composite Index up 1.8 percent on a seasonally adjusted basis.  The Index, a measure of overall mortgage application volume, rose 2 percent on an unadjusted basis compared to the week ended April 19.

The Refinance Index increased 3 percent from the previous week to its highest level since mid-January retaining the same 75 percent share of applications as in the previous week.  Applications for the Home Affordable Refinance Program (HARP) constituted 34 percent of mortgage applications compared to 32 percent the week, the highest share since MBA began tracking HARP activity in February 2012.

The seasonally adjusted Purchase Index was off 1.4 percent from the level a week earlier.  The unadjusted index declined 0.5 percent week-over-week but was 13 percent higher than during the same week in 2012.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

The jumbo 30-year adjustable mortgage (FRM) was the only product for which the contract and effective rates increased during the week.  The average rate for these loans with balances over $417,500 increased to 3.80 percent with 0.29 point from 3.75 percent with 0.37 point.

The rate for 30-year FRM with conforming balances (under $417,500) fell 5 basis points to 3.60 percent with points decreasing to 0.30 from 0.41.   This was the lowest rate since last December.  FHA-backed 30-year FRM had an average rate during the week of 3.34 percent with 0.37 point compared to 3.37 percent with 0.64 point. 

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.84 percent, the lowest rate since December 2012, from 2.89 percent.  Points decreased to 0.26 from 0.40.

Four percent of mortgage applications were for adjustable rate mortgages (ARMs).  The most popular of these, the 5/1 ARM had an average rate of 2.55 percent with 0.22 point compared to 2.62 percent with 0.21 point.   

MBA bases these rate quotes on loans with an 80 percent loan-to-value ratio and points include the origination fee.

The Weekly Mortgage Applications Survey from which this information was derived has been conducted since 1990.  Respondents include mortgage bankers, commercial banks, and thrifts.  The base period and value for all indices is March 16, 1990=100.