Refinancing Rebounds Slightly as Rates Dip; Purchases Slide


As interest rates pulled back last week, refinancing drove mortgage
application activity slightly higher.  The
Mortgage Bankers Association said that its Market Composite Index, a measure of
application volume, increased 1.4 percent on a seasonally adjusted basis during
the week ended August 15 and was up 1 percent on an unadjusted basis.

Refinancing activity increased to a 55 percent share of mortgage applications
from 54 percent the previous week and the Refinance Index increased 3 percent.  The spike in refinancing was offset by a
decline in applications for purchase mortgages and the seasonally adjusted Purchase Index decreased 0.4 percent from the week
ended August 8. 

Refinance Index vs 30 Yr Fixed

The unadjusted Purchase Index decreased 2
percent from the previous week and was 11 percent lower than during the same
week in 2013. 


Purchase Index vs 30 Yr Fixed

“Interest rates dropped
last week as a result of the ongoing
turmoil in Ukraine and other international concerns, which in turn pushed mortgage
rates lower,” said Mike Fratantoni, MBA’s Chief Economist. “Overall application volume for conventional mortgages
increased. However, there was a 5.9 percent decline in the number of applications for government mortgages, with both purchase and refinance applications declining. Within
the government sector,
this decline was led by an 8 percent
decline in unadjusted Department of Veterans Affairs applications, while Federal Housing Administration and Rural Housing Service unadjusted applications also fell by 5 percent
and 3 percent respectively.”

The average
contract interest rates and the effective rates of all mortgage products
declined during the week.  The average interest rate of 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased
to 4.29 percent from 4.35 percent, with points increasing to 0.26 from 0.22.  The average rate for 30-year jumbo FRM
(balances greater than $417,000) fell six basis points to 4.18 percent while
points increased to 0.23 from 0.19.

Thirty-year FRM
guaranteed by the FHA had an average rate of 3.99 percent, down from 4.04
percent.  Points were unchanged at 0.03.

The 15-year FRM had
an average rate of 3.44 percent during the week.  This was a decrease from 3.48 percent and points were unchanged at 0.30.

The share of
applications that were presented for adjustable rate mortgages (ARMs) moved off
of 8 percent for the first time in months, decreasing slightly to 7.8
percent.  The average contract rate for
the most common version the 5/1 hybrid ARM decreased to 3.10 percent from 3.24
percent and points decreased to 0.44 from 0.45.

Weekly Mortgage Applications Survey covers
over 75 percent
of all U.S. retail residential mortgage
applications, and has been conducted since 1990.
Respondents include mortgage
bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100
and interest rate information is based on loans with an 80 percent
loan-to-value ratio.  Points include the
origination fee.

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