Record lows in interest rates were
accompanied by an increase in mortgage refinancing activity during the week
ended December 7. The Mortgage Bankers
Association reports that its Market Composite Index, a measure of mortgage loan
application volume, rose 6.2 percent on a seasonally adjusted basis from a week
earlier and was up 6 percent on an unadjusted basis.
Index was up 8 percent from the previous week and at its highest level since the
week ended October 12. Applications for
refinancing had an 84 percent share of business compared to 82 percent during
the week ended December 1. Refinancing
through the Home Affordable Refinance Program (HARP) accounted for 29 percent
of refinance applications compared to 27 percent the
The seasonally adjusted Purchase Index
increased about 1 percent and the unadjusted Purchase Index was down 4 percent
week-over-week but 9 percent higher than the same week in 2011.
Purchase Index vs 30 Yr Fixed
Refinance Index vs 30 Yr Fixed
"Continued uncertainty due to the lack of resolution
regarding the fiscal cliff led interest rates lower last week, with mortgage
rates reaching a new low in our survey," said Mike Fratantoni, MBA's Vice
President of Research and Economics. "Refinance activity increased, with
the refinance index hitting its highest level in two months, and the refinance
share reaching its highest level since January 2009. Applications for purchase
increased for a fifth consecutive week, and are running almost ten percent
above their level at this time last year."
Both contract and
effective rates decreased for all fixed rate products with several rates setting
new lows. The average contract interest rate for conforming 30-year fixed-rate
mortgages (FRM) (balances of $417,500 or less)
decreased to 3.47 percent, the lowest rate in the history of the survey, from
3.52 percent, and points
decreased to 0.36 from 0.41. Rates
for jumbo 30-year FRM (balances greater than $417,500)
decreased to 3.77 percent from 3.79 percent. Points increased to 0.35 from 0.32.
The contract rate for FHA-backed 30-year FRM decreased to
3.32 percent with 0.51 point, the lowest rate in the history of the survey,
from 3.34 percent with 0.62 point.
fixed-rate mortgage rates declined on average by 1 basis point to 2.85 percent,
the lowest rate in the history of the survey.
Points decreased to 0.26 from 0.27
mortgages were the only products for which rates increased. The average
contract interest rate for 5/1 ARMs increased to
2.63 percent from 2.62 percent,
with points decreasing to 0.34 from 0.40 and the effective rate
increased. The adjustable-rate mortgage
(ARM) share of activity remained at 3 percent of total applications.
Rates are derived from MBA's Weekly Mortgage Application Survey
which covers over 75 percent of all U.S. retail mortgage applications and has
been conducted since 1990. Rates are quoted
for loans with an 80 percent loan-to-value ratio and points include the
origination fee. Base period and value for all indexes is March 16, 1990=100.