The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week
ending May 13, 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. It 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 7.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7.1 percent compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 3.6 percent.
The Refinance Index increased 13.2 percent from the previous week and is at its highest level since the week ending December 10, 2010. The four week moving average is up up 7.2 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.7 percent of total applications from 63.1 percent the previous week. This is the largest refinance share observed since late January.
The seasonally adjusted Purchase Index decreased 3.2 percent from one week earlier. The unadjusted Purchase Index decreased 3.3 percent compared with the previous week and was 1.7 percent lower than the same week one year ago. The four week moving average is down 2.9 percent for the seasonally adjusted Purchase Index.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.60 percent from 4.67 percent, with points decreasing to 0.94 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year rate recorded in the survey since the end of November 2010. The effective rate also decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.75 percent from 3.81 percent, with points increasing to 1.22 from 1.05 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year rate recorded in the survey since early November 2010. The effective rate also decreased from last week.
The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent from 6.5 percent of total applications from the previous week.
"The 30-year fixed mortgage rate is now 53 basis points below its 2011 peak, and has decreased for five straight weeks," said Michael Fratantoni, MBA's Vice President of Research. "Over this five week span, the refinance index has increased by about 33 percent. Refinance application volumes remain about 50 percent below the most recent peak last October."
"Right now we're witnessing the beginnings of a mini-refinance boom in the primary mortgage market, but there has been little activity in the secondary market that would indicate increased rate locking by consumers." says MND's Managing Editor Adam Quinones. "However, if conventional 30-year rates reach 4.25%, we'd expect to see a mini-boom scenario play out. There is much stored demand in the system as many borrowers missed the boat on record low rates in October and early November. This crowd is waiting in the wings for those rates to return. Whether or not that happens is still very much up in the air"