The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 28, 2011. 

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.

Excerpts from the Release...

The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 13.2 percent compared with the previous week.  The previous week did not include a holiday adjustment for Martin Luther King, Jr. Day.    

The Refinance Index increased 11.7 percent from the previous week.   The four week moving average is up 1.7 percent. The refinance share of mortgage activity decreased to 69.3 percent of total applications from 70.3 percent the previous week.

This is the lowest refinance share observed in the survey since the week ending May 14, 2010.

The seasonally adjusted Purchase Index increased 9.5 percent from one week earlier.  The unadjusted Purchase Index increased 16.7 percent compared with the previous week and was 21.4 percent lower than the same week one year ago.   The four week moving average is down 1.5 percent.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.81 percent from 4.80 percent, with points decreasing to 1.02 from 1.19 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate decreased from last week.   

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.13 percent from 4.12 percent, with points decreasing to 1.01 from 1.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

"Applications increased this week relative to the holiday week," said Michael Fratantoni, MBA's Vice President of Research and Economics. "Looking over the past two weeks, purchase applications are flat, and refinance applications are down about five percent."