Application Volume at 19 Month Low as Rates Soar

The
Mortgage Bankers Association (MBA) said rising interest rates caused
mortgage application activity to fall for the second straight time
week during the period ended June 21. The Association’s Market
Composite Index, a measure of application volume, decreased 3.0
percent on a seasonally adjusted basis to its lowest level since
November 2011
. The Composite also fell 3.0 percent on an unadjusted
basis.

The
Refinance Index was down 5 percent from the week ended June 14 also
to its lowest point since November 2011 and constituted a 67 percent
share of application activity, the lowest share since July 2011,
compared to 69 percent the previous week. Thirty
percent of refinancing applications were for the Home
Affordable Refinance Program (HARP), down one percent from the week
before.

Refinance Index vs 30 Yr Fixed

 

The
seasonally adjusted Purchase Index was up 2 percentage points from
the previous week. The unadjusted Purchase Index rose 1 percent
week-over-week and was 16 percent higher than one year earlier. The
government share of purchase applications dropped to 28 percent, the
lowest level in the history of this series. 

Purchase Index vs 30 Yr Fixed

 

“Interest
rates moved up sharply following the Federal Reserve press conference
last Wednesday where it was indicated that the Fed could begin
tapering their asset purchases later this year,” said Mike
Fratantoni, MBA’s Vice President of Research and Economics.
“Mortgage rates increased by the most in a single week since 2011,
and refinance application volume dropped to its lowest level in
almost two years. However, applications for conventional purchase
loans picked up by more than 3 percent over the week, and total
purchase applications were 16 percent higher than one year ago,
indicating that homebuyers are not yet dissuaded by the increase in
mortgage rates. Government purchase applications dropped again,
likely a function of the recent increase in FHA mortgage insurance
premiums.”

Both
contract interest rates and effective rates rose across the board
during the week for loans with an 80 percent loan to value ratio.
Points quoted include the origination fee.

The
average contract rate for 30-year fixed-rate mortgages (FRM) with
conforming loan balances of $417,500 or less increased to 4.46
percent
, the highest rate since August 2011, from 4.17 percent.
Points decreased to 0.35 from 0.41. The jumbo version of the 30-year
FRM (loan balances over $417,500) increased from 4.23 percent with
0.34 point to 4.52 percent with 0.28 point. This was the highest
rate for the jumbo loan since March 2012. The rate for a 30-year FRM
backed by FHA soared to its highest rate since August 2011, 4.20
percent with 0.40 point, compared to 3.85 percent with 0.22 point the
previous week.

Fifteen-year
FRM jumped to the highest rate since November 2011, jumping 25 basis
points to 3.55 percent. Points increased to 0.43 from 0.39.

The
average contract interest rate for 5/1 adjustable rate mortgages
(ARMs) increased to 3.06 percent, the highest rate since October
2011, from 2.81 percent,
with
points increasing to 0.39 from 0.35. The ARM share of activity
increased to 7 percent of total applications.

MBA’s
Weekly Mortgage Application survey, conducted since 1990, covers over
75 percent of all U.S. retail residential mortgage applications.
Respondents include mortgage bankers, commercial banks and thrifts.
Base period and value for all indexes is March 16, 1990=100.

Article source: http://www.mortgagenewsdaily.com/06262013_application_volume.asp

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