Mortgage Apps Increase Despite Rate Rise

The ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) has released its ""Mortgage Applications Survey"":http://www.mortgagebankers.org/NewsandMedia/PressCenter/68454.htm for the week ending April 3, 2009, which shows that loan activity is picking up as potential home buyers take advantage of falling home prices and increasing affordability.
MBA's Market Composite Index, a measure of mortgage loan application volume increased 4.7 percent on a seasonally adjusted basis from the week before. On an unadjusted basis, loan volume increased 4.9 percent compared with the previous week and 67.6 percent compared with the same week last year.
The Purchase Index jumped 11.1 percent compared to one week earlier. The Conventional Purchase Index increased 7.7 percent, while the Government Purchase Index (made up primarily of FHA loans) gained 17.1 percent.
After steadily increasing for the past several weeks, the refinance share of mortgage activity last week decreased to 77.9 percent of total applications, down from 79.1 percent the previous week. Despite the dip in loan share, MBA reported that the Refinance Index last week was up 3.2 percent, and looking at the four week moving average, refinances are up 16 percent.
Perhaps one deciding factor in the declining refinance activity last week was the fact that mortgage interest rates across the board rose, according to MBA's study. The average contract interest rate for 30-year fixed-rate mortgages (FRMs) increased to 4.73 percent, up from 4.61 percent reported by MBA the previous week.
The average rate for 15-year FRMs increased to 4.49 percent, compared to 4.45 percent the week before. And, MBA said, the rate for one-year adjustable rate mortgages (ARMs) increased to 6.23 percent last week, up from 6.20 percent.