Refinancing activity fell again during the week ended August 23, driving down the Mortgage Bankers Association's (MBA) Market Composite Index, a measure of mortgage application volume. The Index decreased 2.5 percent on a seasonally adjusted basis from the week ended May 16. On an unadjusted basis the index was down 3.0 percent.
The Refinance Index has fallen 64.2 percent from its recent peak during the week ended May 3 including a 5 percent decrease in the most recent period. Refinancing now represents 60 percent of mortgage activity compared to 61 percent one week earlier. This is the smallest share of overall application volume refinancing has captured since April 2011.
Refinance Index vs 30 Yr Fixed
Applications for home purchase had a slightly better week. The seasonally adjusted Purchase Index was up 2 percent week-over-week while the unadjusted Purchase Index was up 0.3 percent for the week and was 6 percent higher than the same week in 2012. Applications for refinancing through the HARP program increased from a 34 percent share to 35.
Purchase Index vs 30 Yr Fixed
Average interest rates increased substantially during the week with contract interest rates for many products hitting two-year highs. Effective rates increased across the board.
The average rate for 30-year fixed-rate mortgages (FRM) with conforming loans balances of $417,000 or less increased to 4.80 percent with 0.41 point from 4.68 percent with 0.42 point. This was the highest rate for the 30-year since April 2011. The 30-year jumbo FRM (balances over $417,000) was 4.78 percent with 0.34 point compared to 4.74 with 0.28 point the previous week.
Rates for 30-year FRM with an FHA guarantee averaged 4.52 percent with 0.32 point, the highest rate since July 2011. The previous week the rate had averaged 4.40 percent with 0.21 point.
The rate for 15-year FRM jumped 13 basis points to 3.84 percent, the highest rate since April 2011. Points increased from 0.32 to 0.35.
The most popular of the adjustable rate mortgages (ARMs), the 5-year hybrid loan, had an average contract rate of 3.50 percent, also the highest rate since April 2011, and an increase of 6 basis points from the previous week. Points fell from 0.48 to 0.37. The ARM share of mortgage applications inched up to 7 percent.
Rates are quoted for loans with 80 percent loan-to-value ratios. Points include the origination fee.
MBA's weekly survey, conducted since 1990, covers 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.
