Mortgage Refinancing Up w/e 14 January 2011

January 19th, 2011
in econ_news

Econintersect: The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 14, 2011.  The Market Composite Index, a measure of mortgage loan application volume, increased 5.0 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6.4 percent compared with the previous week.

Follow up:

This report from the MBA coincided with the new residential construction data released by the US Census (analysis here).

The Refinance Index increased 7.7 percent from the previous week. This is the third consecutive weekly increase in refinance applications and is the highest Refinance Index observed since the beginning of December.  The seasonally adjusted Purchase Index decreased 1.9 percent from one week earlier. The unadjusted Purchase Index increased 3.1 percent compared with the previous week and was 16.0 percent lower than the same week one year ago.

"Mortgage rates have moved somewhat lower since the beginning of the year, as mixed data on the job market continue to cloud the outlook for the economy," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Refinance applications have picked up, as borrowers take advantage of lower rates, but purchase applications remain quite low, indicating that home sales are unlikely to pick up any time soon."

The four week moving average for the seasonally adjusted Market Index is up 1.4 percent.  The four week moving average is down 0.8 percent for the seasonally adjusted Purchase Index, while this average is up 2.3 percent for the Refinance Index.

The refinance share of mortgage activity increased to 73.0 percent of total applications from 72.1 percent the previous week.  This is the highest refinance share observed since the week ending December 10, 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.0 percent from 4.9 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.77 percent from 4.78 percent, with points increasing to 1.20 from 0.91 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.16 percent from 4.15 percent, with points decreasing to 0.90 from 1.01 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week.

source: MBA

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