Lower Treasury rates sparked an increase in mortgage applications during the week ended November 4 according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.  An increase in volume was noted for both purchase mortgages and refinancing.

The Market Composite Index which measures overall applications volume increased 10.3 percent on a seasonally adjusted basis from the week ended October 28 and 9.9 percent unadjusted.  The Refinance Index was up 12.1 percent and the seasonally adjusted Purchase Index increased 4.8 percent to the highest level since August.  The unadjusted Purchase Index increased 2.7 percent over the previous week and was 2.5 percent lower than during the same week in 2010.

"Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year," said Mike Fratantoni, MBA's Vice President of Research and Economics. "Refinance applications jumped more than 12 percent to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to deleverage by choosing 15-year mortgages."

The four week moving averages for the seasonally adjusted Composite Index and the Refinance Index were down 0.37 percent and 0.72 percent and up 0.89 percent for the seasonally adjusted Purchase Index.  

The refinancing share of mortgage activity rose to 78.6 percent from 77.1 percent, the first increase in three weeks.  Adjustable Rate Mortgages (ARMs) accounted for 5.8 percent of applications, unchanged from the previous week.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Average contract interest rates fell for all major loan products with 80 percent loan-to-value ratios:

  • Conforming 30-year fixed-rate mortgages (FRM) (loans with balances under $417,500) decreased to 4.22 percent with 0.41 point (including origination fee) from 4.31 percent with 0.49 point.
  • Jumbo mortgages rates (loans with balances over $417,500) decreased to 4.57 percent from 4.69 percent while points increased to 0.47 from 0.45.
  • Fifteen-year FRMs averaged 3.54 percent compared to 3.63 percent with points unchanged at 0.45.
  • FHA-backed mortgages fell 7 basis points to 4.02 percent with points decreasing from 0.51 to 0.49.
  • Hybrid 5/1 ARMS decreased to 3.01 percent from 3.09 percent with points decreasing from 0.50 to 0.47.

The effective rate for all loan types also decreased during the week.

MBAs applications survey covers over 75 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.