The Mortgage Bankers Association (MBA) today
released its Weekly Mortgage Applications Survey for the week
ending February 18th, 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 13.2 percent on a seasonally
adjusted basis from one week earlier. On an unadjusted basis, the Index
increased 14.8 percent compared with the previous week.
The Refinance Index increased 17.8 percent
from the previous week. The four
week moving average is up 1.8 percent. The refinance share of mortgage activity
increased to 65.7 percent of total applications from 64.0 percent the previous
week.
The seasonally adjusted Purchase Index
increased 5.1 percent from one week earlier. The unadjusted Purchase Index
increased 9.6 percent compared with the previous week and was 6.9 percent lower
than the same week one year ago. The
four week moving average is up 1.6 percent for the seasonally adjusted Purchase
Index.
The average contract interest rate for
30-year fixed-rate mortgages decreased to 5.00 percent from 5.12 percent, with
points increasing to 0.97 from 0.85 (including the origination fee) for 80
percent loan-to-value (LTV) ratio loans. The effective rate also
decreased from last week.
The average contract interest rate for
15-year fixed-rate mortgages decreased to 4.28 percent from 4.34 percent, with
points decreasing to 0.80 from 0.85 (including the origination fee) for 80
percent LTV loans. The effective rate also decreased from last week.
"Ongoing turmoil in the Middle East brought
interest rates lower last week. Borrowers took advantage of these lower
rates, bringing application activity back near levels from two weeks ago,
following sharp declines last week," said Michael Fratantoni, MBA's Vice
President of Research and Economics.
READ MORE: OUTLOOK UPGRADED FOR MORTGAGE RATES