Mortgage Applications Rebound, Offsets Labor Day Losses

The week ended September 12 saw the losses in application volume which occurred
during the previous week which was shortened by the Labor Day holiday mostly
reversed.  Mortgage application volume
increased in most categories by nearly the same percentages as they had fallen
during the week ended September 5. 

The Mortgage Bankers Association said that its Market Composite Index, a
measure of mortgage application volume increased 7.9 percent from the previous
week’s seasonally adjusted index which had included an adjustment for the
holiday.  On an unadjusted basis the
Index increased by 19 percent, offsetting the 17 percent decline the previous
week. 

The Refinance Index increased 10 percent from its level the previous week
following an 11 percent decline. 
Applications for refinancing as a percentage of all applications
increased to 57 percent, the highest level since February, from 55 percent the
previous week.

 

Purchase Index vs 30 Yr Fixed

 

Applications for home purchases increased 5 percent from a week earlier on
a seasonally adjusted basis while the unadjusted Purchase Index increased 14
percent.  The adjusted and unadjusted
indices had declined by 3 percent and 14 percent the previous week.  The unadjusted Purchase Index was 10 percent
lower than during the same week in 2013.

 

Refinance Index vs 30 Yr Fixed

 

Mike Fratantoni, MBA’s Chief Economist suggested that given the holiday
related volatility it would be helpful to look at net change over a two week
span.  “Refinance applications are down 1.4 percent while purchase
applications are up 2.1 percent,” he said.  “Purchase
volume continues
to track almost
ten percent behind
last year’s levels
.”

He pointed out
that application volume still managed to rebound after the holiday even as
mortgage interest rates increased to their highest levels in the last few
months.  For example, the rate for
30-year fixed rate mortgages (FRM) with conforming balances of $417,000 or more
increased by 9 basis points to 4.36 percent, the highest level since June.  Points for that product were down to 0.20
from 0.25 but the effective rate still increased.

Rates for jumbo 30-year
FRM (loan balances over $417000) also increased by 9 basis points to 4.34
percent while points decreased to 0.16 from 0.23.  The effective rate also increased.

The average
contract interest rate for
30-year FHA-backed FRM rose to 4.03 percent from 3.97 percent, with points decreasing to 0.05 from 0.08.  The
effective rate increased
from the previous week.

The largest
increase
was for the 15-year FRM which jumped from 3.44 percent with 0.28 point
to 3.56 percent with 0.25 point.  The
effective rate was up.

The market share of
adjustable rate mortgages (ARM) rose slightly from 7.5 to 7.6 percent despite an
increase in interest rate of the most popular ARM product, the 5/1 hybrid, That
rate increased to 3.19 percent from 3.12 percent, with points decreasing to 0.29 from 0.45.  The effective rate increased from the
previous week.

MBA’s
application information is derived from its Weekly Mortgage Application Survey
which has been conducted since 1990.  The
survey covers over 75 percent of all U.S. retail mortgage applications and
respondents include mortgage bankers,
commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100
and interest rate information assumes a loan with an 80 percent loan-to-value
ratio and points that include the origination fee.

Article source: http://www.mortgagenewsdaily.com/09162014_application_volume.asp

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