Weekly Mortgage Applications Survey Shows Decrease

Each week the Mortgage Bankers Association (MBA) releases a report called the Weekly Mortgage Applications Survey. The survey is based on the movement of the market and the actions of the people in the area. The MBA is a research and economics group that provides current and comprehensive data for short-term and long-term planning. The MBA focuses on economic forecasting in real estate.

The Market Composite Index is a measurement of the volume of mortgage loan applications. Due to rising interest rates it decreased 10.5 on a basis adjusted for the season this week compared to last week’s increase of 14.6 percent. The unadjusted basis also decreased by 10.5 percent compared to last week’s gain of 14.8 percent. The Columbus Day Holiday was not figured into the adjustments. There was no new stats about foreclosure situation based on this survey.

The Refinance Index dropped to 11.2 % from last week’s 21.0% while the Purchase Index adjusted for the season fell 6.7% to the prior week’s 8.5%. The adjusted Purchase Index decreased 6.6% to that of last week’s 8.3%. At the end of last week the Federal Housing Authority began enforcing stricter lending rules. Most people scrambled to file their loan applications before the new rules took effect. This affected the unadjusted Purchase Index, making it fall to 29.4% lower than this week a year ago compared to 37.1% last week.

China announced that they were raising their interest rates sending stocks on the rise. This played a part in this weeks 4.0% increase in the 4 weeks moving average of the Market Index adjusted for the season from last week’s 3.0%. The adjusted rate fell 1.1% compared to the previous weeks 0.3%. The average Refinance Index went up 0.7% from last week’s 3.9%.

This week saw a decrease in the mortgage activity’s refinance share to 82.4% of overall applications from 83.1% last week. Though it may be temporary, this week’s total percentage of applications rose to 5.8% from last week’s 5.4%.

As builder confidence rises so does the typical contract interest fixed-rate mortgage of 30 years with an increase to 4.34% this week compared to 4.21% last week. Points fell to 0.81% from 1.02% for 80% LTV loans. This has been the first increase in six weeks. The effective rate increased this week as well.

More people are opting for mortgages of 15 years because of their lower interest rates, which helps keep monthly mortgage payments more affordable. The average for the 15-year fixed-rate mortgages climbed to 3.74% compared to last week’s 3.62% with decreases to 1.00 from 1.06 for 80% loan-to-value (LTV) loans. The 15-year contract rate saw its first gain in six weeks, the effective rate also increasing.

This week saw a decrease in the refinance share of mortgage activity to 82.4% of total applications from 83.1% last week. Due to the state of the market, now is a good time for people with high interest rates on their mortgages to refinance. This week’s total percentage of applications rose to 5.8% from last week’s 5.4%.

10/20/2010 10/13/2010 Refinance Index ↓ 11.2% ↑ 21.0% 30 Year Mortgage ↑ 4.34% ↓ 4.21% 15 Year Mortgage ↑ 3.74 % ↓ 3.62%