The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 7, 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 2.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47.5 percent compared with the previous week, which included the New Year's holiday.
The Refinance Index increased 4.9 percent from the previous week. The four week moving average is down 7.5 percent. The refinance share of mortgage activity increased to 72.1 percent of total applications from 71.0 percent the previous week.
The seasonally adjusted Purchase Index decreased 3.7 percent from one week earlier. The unadjusted Purchase Index increased 41.9 percent compared with the previous week and was 10.5 percent lower than the same week one year ago. The four week moving average is down 1.0 percent
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.78 percent from 4.82 percent, with points decreasing to 0.91 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the second straight decline for the 30-year fixed rate, which is now 15 basis points lower than the survey's seven-month high observed two weeks ago. The effective rate also decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.15 percent from 4.23 percent, with points increasing to 1.01 from 1.00 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.