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Refinance Index Increases from Previous Week as Fixed-Mortgage Rates Reach All-Time Lows

July 17, 2002

Mortgage Loan Applications Down Slightly in Latest MBA Survey

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 July 12 decreased 1.3 percent to 722.2 on a seasonally adjusted basis from 732.0 the previous week, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA). However, mortgage interest rates are at all-time lows and, refinancing activity has increased to 53.4 percent from 50.5 percent the previous week.

"As Federal Reserve Chairman Alan Greenspan noted in his testimony before Congress yesterday, low interest rates have allowed consumers to purchase and refinance homes at a strong pace recently," stated Phil Colling, an MBA economist. "The numbers released in the Weekly Applications Survey this morning show that indeed both fixed and adjustable mortgage rates last week were some of the most favorable to consumers of all time."

On an unadjusted basis, the application index increased 40.8 percent and was up 53.3 percent compared with the same week a year earlier.

The MBA seasonally adjusted Purchase Index decreased to 377.1 from 408.0 the previous week. The seasonally adjusted Refinance Index increased to 2729.5 from 2616.6 the previous week. Other seasonally adjusted index activity included the Conventional Index, which decreased to 1019.6 from 1024.4 the previous week, and the Government Index, which increased to 226.0 from 243.9 the previous week.

The share of ARM remained the same as the previous week, at 18.0.

The average contract interest rate for 30-year fixed-rate mortgages was 6.31 percent, decreasing from 6.46 percent the previous week, with points decreasing to 1.38 from 1.47 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. At 6.31 percent, the 30-year fixed rate last week was the lowest since MBA began tracking mortgage rates in January 1990. The previous low was 6.36 percent during the week ended October 2, 1998.

The average contract interest rate for 15-year fixed-rate mortgages was 5.75 percent, decreasing from 5.93 the previous week, with points increasing slightly to 1.38 from 1.37 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 15-year fixed rate also set an all-time low record. The previous low of 5.79 percent occurred the week ended November 9, 2001.

The average contract interest rate for 1-year ARMs was 3.97 percent, decreasing from 4.14 percent the previous week, with points increasing to 1.13 from 1.05 the previous week (including the origination fee) for 80 percent LTV loans. The 1-year ARM rate dropped below 4 percent last week for the first time since November 5, 1993. The all-time low rate for the 1-year ARM of 3.83 percent occurred the week ended October 8, 1993. eu/

Source: Mortgage Bankers Association

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