The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending April 29, 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 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.1 percent compared with the previous week.
The Refinance Index increased 6.0 percent from the previous week. The four week moving average remained unchanged. The refinance share of mortgage activity increased to 62.7 percent of total applications from 61.6 percent the previous week. This is the highest refinance share of the month.
The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1.1 percent compared with the previous week and was 36.9 percent lower than the same week one year ago. The four week moving average is down 2.4 percent.
The average contract interest rate for 30-year fixed-rate mortgages decreased for the
third consecutive week to 4.76 percent from 4.80 percent, with
points decreasing to 0.76 from 1.00 (including the origination fee) for 80
percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed
contract rate since December 3, 2010. The effective rate also decreased from
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.96 percent from 4.03 percent, with points decreasing to 0.82 from 0.96 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed contract rate since November 26, 2010. The effective rate also decreased from last week.
"Although demand for home loans moved up modestly last week as rates hit their best levels of the year, loan application activity continues to stagnate overall", explains MND's Managing Editor Adam Quinones. "We'll need to see 30-year fixed mortgage rates approach 4.25% before a sizable uptick in refinancing is observed. On the buyer front, since early February we've heard reports from originators about a seasonal increase in purchase applications. The Purchase Index has however lost momentum following FHA's mortgage insurance fee increase on April 18th."
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