April 6th, 2011
Econintersect: Mortgage applications decreased 2.0 percent for the week ending April 1, 2011 according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.
Econintersect believes mortgage applications are no longer predicitive of home sales as over 1/3 of the current home purchases are not financed. Follow up:
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.5 percent compared with the previous week.
“Purchase application volume increased last week reaching the highest level of the year, but remains relatively low by historical standards, at levels last seen in 1997,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The increase last week was due to a sharp increase in applications for government loans. Borrowers were likely motivated to apply before a scheduled increase in FHA insurance premiums that became effective last Friday.” Fratantoni continued, “Rates were flat last week, but refinance activity fell, as the pool of borrowers who have both the incentive and the ability to qualify for a refinance continues to shrink.”
The four week moving average for the seasonally adjusted Market Index is down 1.9 percent. The four week moving average is up 0.9 percent for the seasonally adjusted Purchase Index, while this average is down 3.2 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 61.2 percent of total applications from 64.3 percent the previous week. This is the lowest refinance share since May 7, 2010. The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent from 5.7 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.93 percent from 4.92 percent, with points decreasing to 0.70 from 0.83 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate decreased from last week.