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For the week ending January 29, 2010, mortgage rates inched down further and mortgage applications continued to increase, according to the Weekly Mortgage Applications Survey released Wednesday by the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA).
[IMAGE]The Market Composite Index, a measure of mortgage loan application volume, jumped 21 percent on a seasonally adjusted basis from the prior week. On an adjusted basis, the index soared 23.5 percent from week-to-week. This rebound in mortgage application volume returned the purchase and refinance indexes to levels from mid-December, according to Michael Fratantoni, MBA's VP of research and economics.
The Refinance Index surged 26.3 percent from the previous week, and the seasonally adjusted Purchase Index increased 10.3 percent week-to-week. In addition, the unadjusted Purchase Index rose 17.5 percent from the prior week but was 11.2 percent lower than the same week a year ago.
MBA also reported that the four week moving averages for multiple indexes increased last week. The four week average for the seasonally adjusted Market Index jumped 7.6 percent, and the seasonally adjusted four week average for the Purchase Index increased 3 percent. Marking the highest increase, the four week moving average for the Refinance Index was up 9.4 percent.
Up from 67.6 percent the week prior, the refinance share of mortgage activity increased to 69.2 percent of total applications. The adjustable-rate mortgage (ARM) share of activity, though, decreased to 4.5 percent, falling 0.2 percent from 4.7 percent of total applications the previous week.
The surge in mortgage loan application volume was accompanied by a slight decrease in mortgage rates. Compared to the previous week, the average interest rate for 30-year fixed mortgages fell to 5.01 percent from 5.02 percent, with points increasing to 1.04 from 1.00 for 80 percent loan-to-value (LTV) ratio loans. During the same period, the average interest rate for 15-year fixed mortgage dropped to 4.33 percent from 4.34 percent, with points increasing to 1.17 from 1.14 for 80 percent LTV loans. In addition, the average interest rate for one-year ARMs declined to 6.7 percent from 6.84 percent, with points increasing to 0.34 from 0.22 for 80 percent LTV loans.
""Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009, and hence are not generating substantial refi volume,"" Fratantoni said. ""We expect that rates will rise over the next few months as the Federal Reserve winds down its mortgage-backed securities purchase program, and this will likely lead to a decline in refinance volume.""
