The Mortgage Bankers Association (MBA) today
released its Weekly Mortgage Applications Survey for the week
ending March 4 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 15.5 percent on a seasonally
adjusted basis from one week earlier. On an unadjusted basis, the Index
increased 16.1 percent compared with the previous week.
The Refinance Index increased 17.2 percent
from the previous week and was the highest Refinance Index observed since the
week ending January 14, 2011. The four week moving average is up 3.6
percent. The refinance share of mortgage activity increased to 65.5 percent of
total applications from 64.9 percent the previous week.
IMPORTANT NOTE: The previous week's data
did not include a holiday adjustment for Presidents' Day, the week over week percentage rebound we are seeing today was likely overstated as a result.
The seasonally adjusted Purchase
Index increased 12.5 percent from one week earlier and was the highest Purchase
Index recorded this year. The unadjusted Purchase Index increased 14.3 percent
compared with the previous week and was 14.3 percent lower than the same week
one year ago. The four week moving average is up 1.2 percent for the seasonally
adjusted Purchase Index.
The average contract interest rate
for 30-year fixed-rate mortgages increased to 4.93 percent from 4.84 percent,
with points decreasing to 0.87 from 1.29 (including the origination fee) for 80
percent loan-to-value (LTV) ratio loans. The effective rate also
increased from last week.
The average contract interest rate
for 15-year fixed-rate mortgages remained unchanged at 4.17 percent, with
points increasing to 1.15 from 1.07 (including the origination fee) for 80
percent LTV loans. The effective rate increased from last week.
"Taking
into account typical seasonal patterns, purchase applications rose to their
highest level of the year last week. On an unadjusted basis, purchase
application activity is the highest since last May," said Michael
Fratantoni, MBA's Vice President of Research and Economics. "An
improving job market is beginning to pave the way for an improving housing market.
Additionally, mortgage interest rates remained below 5 percent for a second
week, maintaining affordability for buyers and leading to an increase in
refinance applications."