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Interest Rates Reach Record Low (Again) In Latest MBA Survey

March 6, 2003

Refinancing Index Near Record High

WASHINGTON, D.C. - The Market Composite Index of mortgage loan applications -- a measure of mortgage loan applications for purchases and refinancings -- for the week ending February 28 increased by 10.8 percent to 1265.4 on a seasonally-adjusted basis from 1142.3 previous week, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today. On an unadjusted basis, the Index increased 23.7 percent and was up 94.8 percent compared to the same week a year earlier.

The MBA seasonally adjusted Purchase Index increased to 345.9 from 309.0 the previous week. The seasonally adjusted Refinance Index increased to 6614.0 from 5989.6 the previous week. This is the fourth highest level for the Refinance Index in the history of MBA's Weekly Applications Survey. The record high of 6926.9 was reached the week ending October 4, 2002. Other seasonally adjusted index activity included the Conventional Index, which increased to 1842.1 from 1665.0 the previous week. The Government Index increased to 303.1 from 270.1 the previous week.

Refinancing activity represented 74.7 percent of total applications, decreasing from 75.3 percent the previous week. The share of ARM activity increased to 13.8 percent from 13.3 percent the previous week.

"Investors were nervous last week due to the situation with Iraq and mixed economic signals," noted MBA Economist Phil Colling. "This sent the yield on Treasury notes down and dropped mortgage interest rates to another record low. The rate drops over the last few weeks have obviously driven up refinancings."

The average contract interest rate for 30-year fixed rate mortgages decreased to a new record low of 5.57 percent from the previous record low of 5.65 percent the previous week, with points decreasing to 1.46 from 1.49 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed rate mortgages decreased to a new record low of 4.90 percent from the previous record low of 5.02 percent the previous week, with points decreasing to 1.38 from 1.43 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 1-year ARMs decreased to a new record low of 3.49 percent from 3.60 percent the previous week, with points increasing to 1.05 from 1.00 the previous week (including the origination fee) for 80 percent LTV loans.

Source: Mortgage Bankers Association



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