Lower Mortgage Rates Spur Refinance Filings To Jump 88.1% Over Week Before
|September 17, 2008|
Mortgage applications jumped on lower rates acconding to the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending September 12, 2008.
The Market Composite Index, a measure of mortgage loan application volume, was 661.7, an increase of 33.4 percent on a seasonally adjusted basis from 496.2 one week earlier. On an unadjusted basis, the Index increased 65.3 percent compared with the previous holiday-shortened week and was down 1.3 percent compared with the same week one year earlier.
"The drop in mortgage rates reflected the Treasury's announcement that Fannie Mae and Freddie Mac were placed under conservatorship of the Federal Housing Finance Agency," said Orawin Velz, MBA's Associate Vice President of Economic Forecasting. "Renewed financial concerns should keep long-term Treasury yields low and translate to lower mortgage rates in the near term despite some widening in mortgage spreads. We expect to see meaningful increases in mortgage demand in coming weeks on both the purchase and refi sides."
The Refinance Index increased 88.1 percent to 2300.0 from the previous week and the seasonally adjusted Purchase Index increased 2.4 percent to 380.4 from one week earlier. The Conventional Purchase Index increased 5.3 percent while the Government Purchase Index (largely FHA) decreased 4.5 percent. The four week moving average for the seasonally adjusted Market Index is up 13.5 percent. The four week moving average for the seasonally adjusted Purchase Index is up 4.9 percent, while this average is up 29.1 percent for the Refinance Index.
The refinance share of mortgage activity increased to 51.6 percent of total applications from 36.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.0 percent from 6.4 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.82 percent from 6.06 percent, with points increasing to 1.13 from 1.02 (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 5.54 percent from 5.73 percent, with points increasing to 1.12 from 0.98 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.95 percent from 7.00 percent, with points increasing to 0.34 from 0.30 (including the origination fee) for 80 percent LTV loans.