After falling to it's lowest level in more than 12 years last week, the Mortgage Bankers Association's (MBA) Market Composite Index fell another 6.3 percent this week. The index, a measure of application volume for both purchases and refinances, moved from from 374.6 during the week ended December 13 to 351.1 on the week ended Dec 20. It's important to remember that there is typically a substantial dip into late December despite the data being seasonally adjusted.
"Following the Federal Reserve’s taper announcement, mortgage application volume dropped again last week, with rates increasing and refinance application volume falling to its lowest level since November 2008,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Purchase application volume was weak too, continuing to run more than ten percent below last year’s pace. Notably, government purchase application volume is almost 25 percent below where it was at this time last year, with the larger drop compared to conventional purchase likely due to the increase in FHA premiums over the course of the year.”
The MBA's Refinance Index was down 8 percent from the previous week and refinance share of all activity returned to 65 percent after rising to 66 percent last week. The seasonally adjusted Purchase Index decreased 4 percent from last week's 1-year low 174.7 to 168.6 in the current week. The unadjusted Purchase Index decreased 5 percent and was 11 percent lower than the same week one year ago.
Refinance Index vs 30 Yr Fixed
Purchase Index vs 30 Yr Fixed
Mortgage rates continued higher. The 30-year fixed-rate mortgage (FRM) with conforming balances of $417,000 or less had an average contract rate of 4.64 percent with 0.41 points, the highest since September. The previous week the rate was 4.62 percent with 0.38 point. The effective rate also increased.
The jumbo 30-year FRM (balances over $417,000) had an average contract rate of 4.63 percent, an increase of 2 basis points from the previous week, and points remained unchanged at 0.24. This was also the highest contract rate since September and the effective rate increased as well.
30-year fixed rate mortgages backed by the FHA rose from the previous week with the contract rate at 4.29 percent compared to 4.35 percent. Points decreased to 0.24 from 0.32.
Average rates for 15-year FRM increased to 3.74 percent, the highest since September, though points decreased from 0.35 to 0.29.
Both the average contract rate and effective rate of the 5/1 ARM increased with the contract rate rising 6 basis points to 3.26 percent though points decreased to 0..39 from 0.42.
Application volume and rate information are compiled by MBA from its Weekly Mortgage Application Survey which has been conducted since 1990. Rates are quoted for loans with an 80 percent loan-to-value ratio and points include the origination fee. Base period and value for indexes is March 16, 1990=100.