The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending April 22, 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, decreased 5.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5.6 percent compared with the previous week.
The Refinance Index decreased 0.6 percent from the previous week. The four week moving average is down 3.2 percent. The refinance share of mortgage activity increased to 61.6 percent of total applications from 58.5 percent the previous week. This is the highest refinance share of the month.
The seasonally adjusted Purchase Index decreased 13.6 percent to its lowest level since February 25, 2011, driven by a 26.6 percent decrease in government purchase applications. The unadjusted Purchase Index decreased 12.8 percent compared with the previous week and was 28.8 percent lower than the same week one year ago. The four week moving average is down 0.8 percent.
The average contract interest rate for 30-year fixed-rate mortgages
decreased to 4.80 percent from 4.83 percent, with points decreasing to
1.01 from 1.06 (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 4.03 percent from 4.07 percent, with points decreasing to 0.96 from 1.02 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.
"Purchase applications fell last week, driven primarily by a sharp decrease in government purchase applications as new, higher FHA premiums went into effect," said Michael Fratantoni, MBA’s Vice President of Research and Economics. “This decrease reverses a 20 percent increase in government purchase applications over a four week period, which was likely driven by borrowers attempting to beat this deadline.”
READ MORE: FHA Hikes Annual MIP Fee