The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the weeks ending December 24, 2010 and December 31, 2010.

The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts.

The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.

This week's release is a bit of a departure from the normal procedure as it includes two weeks of data, owing to the holidays.  For the purposes of readability, we'll refer to the week ending 12/24 as "Week 1" and the week ending 12/31 as "Week 2."

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, DECREASED 3.9 percent on a seasonally adjusted basis in week 1 and INCREASED by 2.3 percent during week 2.   Both weeks results include an adjustment to account for the Christmas and New Year's Day holidays. On an unadjusted basis, the Index decreased 23.7 percent in week 1 and 10.0 percent  in week 2.

For week 1, the Refinance Index decreased 7.2 percent followed by a 3.9 percent increase in week 2.   The refinance share of mortgage activity for week 2 was 71.0 percent, an increase from 70.3 percent for week 1.

The seasonally adjusted Purchase Index INCREASED 3.1 percent in week 1 and DECREASED 0.8 percent in week 2.  The unadjusted Purchase Index decreased 18.1 percent in week 1 followed by a 12.2 percent decrease in week 2. This measure was 12.1 percent higher and 6.1 percent lower, respectively, than the same period a year ago.

The average interest rate for 30-year fixed-rate mortgages increased to 4.93 percent from 4.84 percent in week 1, with points decreasing to 0.63 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) loans. For week 2, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.82 percent with points increasing to 1.11.

For week 1, the average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.22 percent, with points increasing to 1.34 from 1.19 (including the origination fee) for 80 percent LTV loans. week 2, the average contract interest rate for 15-year fixed-rate mortgages increased to 4.23 percent with points decreasing to 1.00.