The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending August 19, 2011. With purchase mortgage applications at the lowest level since 1996, the Market Composite Index, a measure of mortgage application volume, decreased 2.4 on a seasonally adjusted basis from one week earlier. On an unadjusted basis it was down 2.9 percent. The changes were driven by the Purchase Index which dropped 5.7 percent on an adjusted basis and 7.3 percent unadjusted and was 7.3 percent lower than the same week one year ago.
The Refinance Index lost 1.7 percent although the market share of refinancing continued to climb, accounting for 79.8 of all mortgage applications, an increase of 1 percentage point and the highest percentage since November 2010. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent from 5.8 percent of total applications from the previous week.
The four-week moving average for the seasonally adjusted Market Index is up 6.9 percent since last week. The four week moving average for the Purchase Index slipped 2.6 percent while the moving average for the Refinancing Index jumped 9.9 percent.
"Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," said Mike Fratantoni, MBA's Vice President of Research and Economics. This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent, and purchase applications for the government housing programs (FHA, VA, and USDA) falling by 8.2 percent. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly."
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.39 percent from 4.32 percent, with points including the origination fee increasing to 0.88 from 0.86 for 80 percent loan-to-value (LTV) ratio loans. The average rate for 15-year fixed-rate mortgages increased to 3.56 percent with 1.0 point from 3.47 percent with 1.08 points. The effective rate for both types of loan also increased from last week.
The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.