Mortgage Refinance Applications Up as Rates Continue to Decline

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The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 25, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.3 percent compared with the previous week.
 
The Refinance Index increased 12.6 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 22, 2009. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier. The unadjusted Purchase Index decreased 3.8 percent compared with the previous week and was 36.0 percent lower than the same week one year ago.
 
"Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey.  Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows."
 
The four week moving average for the seasonally adjusted Market Index is up 1.5 percent.  The four week moving average is down 0.8 percent for the seasonally adjusted Purchase Index, while this average is up 2.1 percent for the Refinance Index.
 
The refinance share of mortgage activity increased to 76.8 percent of total applications from 73.8 percent the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity decreased to 4.7 percent from 4.9 percent of total applications from the previous week.
 
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.75 percent, with points decreasing to 0.96 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This is the lowest 30-year contract rate recorded in the survey since the week ending April 24, 2009.  The effective rate also decreased from last week.
 
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.06 percent from 4.19 percent, with points decreasing to 0.97 from 1.00 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year contract rate ever recorded in the survey.  The effective rate also decreased from last week.
 
The average contract interest rate for one-year ARMs was unchanged at 7.05 percent, with points remaining constant at 0.27 (including the origination fee) for 80 percent LTV loans.

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