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Mortgage Application Volume Jumps 4% as Purchase Applications Soar

Bolstered by a spike in purchase applications in the days leading up to the expiration of the homebuyer tax credit, total mortgage application volume increased 4 percent for the week ending April 30, 2010, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.


According to MBA's Weekly Mortgage Application Survey, the seasonally-adjusted purchase index surged 13 percent from the week prior, marking the third consecutive weekly increase in purchase applications and the highest purchase index recorded in the survey since the week ending October 2, 2009. The conventional purchase index jumped 9.4 percent from the previous week, and the government purchase index soared 16.7 percent.

""Purchase application activity continued to increase in the last week of the homebuyer tax credit program,"" said Michael Fratantoni, MBA's VP of research and economics. ""Purchase applications were up 13 percent over the previous week and almost 24 percent over the last month, driven by significant increases in both conventional and government purchase applications. We also saw the government share of applications for purchasing a home increase to over 50 percent of all purchase applications last week, which is the highest in two decades.""

While purchase applications increased significantly, the opposite was true for refinance applications. From one week to the next, the refinance index decreased 2.1 percent, bringing the refinance share of mortgage activity down to 51.9 percent of total applications compared to 55.7 percent the week before. MBA said this is the lowest refinance share observed in the survey since the week ending July 3, 2009.

The spike in purchase applications and drop in refinance applications was accompanied by a week-to-week decline in mortgage interest rates. According to MBA, the average contract interest rate for 30-year fixed-rate mortgages fell to 5.02 percent from 5.08 percent, and the average interest rate for 15-year fixed-rate mortgages inched down to 4.34 percent from 4.38 percent.

About Author: Brittany Dunn


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