Mortgage application volume jumped back after the shortened Thanksgiving holiday week with activity rising 12.8 percent on a seasonally adjusted basis and 60.2 percent on an unadjusted basis than during the week ended November 25. Figures from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ended December 2 were released this morning.
The Refinance component of the Market Composite Index figures referenced above increased 15.3 percent from the previous week and the seasonally adjusted Purchase Index was up 8.3 percent to its highest level since August 5. The unadjusted Purchase Index increased 47.2 percent compared with the previous short week and was 0.8 percent lower than one year earlier.
The four-week moving average for the seasonally adjusted Market Index was down 3.20 percent and the Refinance Index was down 5.13 percent. The moving average for the seasonally adjusted Purchase Index rose 3.33 percent.
Refinancing activity rose to 76.0 percent of application volume from 73.9 percent the previous week and the share of applications for adjustable rate mortgages (ARM) decreased one basis point to 5.7 percent.
"Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months," said Michael Fratantoni, MBA's Vice President of Research and Economics. "In particular, refinance applications increased sharply, with some lenders seeing refinance volume double. Despite this surge, aggregate refinance activity is still below levels reported two weeks ago. Some lenders indicated they are beginning to see an increase in HARP loans, but that increase is still a small portion of the move this week."
During the month of November 2011 52.9 percent of borrowers who were refinancing chose fixed rate 30-year mortgages (FRM) and 26.2 chose FRM with 15-year terms. Only 5.8 percent applied for ARMs. Fixed-rate loans with amortization schedules on other than 15- or 30-year schedules attracted 15.1 percent of refinancing applications. The demand for ARM and 15-year FRM fell during November while the share of 30-year and "other" types of loans increased. Applicants for purchase mortgages overwhelmingly (85.5 percent) chose 30-year FRM while 6.8 percent opted for 15-year FRM and 5.9 percent, for ARMs.
Hybrid ARMs were the only loans for which interest rates increased during the week. The average contract rate for a 5/1 ARM was 3.01 percent with 0.54 point, up from 2.98 percent with 0.47 point the previous week. The effective rate also increased.
Purchase Index vs 30 Yr Fixed
Refinance Index vs 30 Yr Fixed
Interest rates for all fixed-rate loan products decreased as did their effective rate. The rate for 30-year FRM with conforming loan balances ($417,500 or less)decreased to 4.18 percent from 4.21 percent which was the lowest rate since September 30. Points decreased to 0.48 fro 0.49. Rates for jumbo loans (balances over $417,500) fell to their lowest rates since September 30, 4.52 percent compared to 4.55 percent the previous week. Points increased to 0.47 from 0.45.
Thirty-year FRM backed by FHA had an average rate of 3.98 percent, down two basis points for the week and the lowest rate since January. Points decreased to 0.52 from 0.62. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.53 percent from 3.58 percent, with points unchanged at 0.45.
All rates are quoted for loans with an 80 percent loan-to-value ratio and points include the origination fee.
MBA's Weekly Application 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.