Mortgage Loan Applications Reach Record High Last Week
August 7, 2002
Fixed Mortgage Rates Set New Record Lows
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 August 2 increased 6.2 percent to 1066.9 on a seasonally adjusted basis from 1004.3 the previous week, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today. The Market Composite Index set a new record high, breaking the previous record of 1055.5 set the week ended November 9, 2001. On an unadjusted basis, the Market Composite Index increased 6.0 percent and was up 100.0 percent compared to the same week a year earlier.
Last week's reports that economic growth was weaker than expected had a negative impact on stock prices. This led many investors to pull out of stocks and invest more in bonds," said Phil Colling, an MBA economist. "This ‘flight to quality' phenomenon led to lower interest rates, especially in the latter half of the week. By Friday the 10-year Treasury Note yielded 4.29 percent – the lowest since September 1965.
Fixed mortgage rates also declined and consumers are now rushing to take advantage of low rates to refinance existing mortgages. It is possible that with interest rates at record lows some consumers, who refinanced at rates above seven percent for a 30-year fixed rate mortgage, are now refinancing again. The home purchase market is also benefiting from today's low interest rates"
The MBA seasonally adjusted Purchase Index increased to 374.0 from 360.5 the previous week. The record high for the Purchase Index of 408.0 was established the week ended July 5, 2002. The seasonally adjusted Refinance Index increased to 5097.3 from 4748.8 the previous week. The record high for the Refinance Index of 5534.5 was established the week ended November 9, 2002. Other seasonally adjusted index activity included the Conventional Index, which increased to 1538.0 from 1454.4 the previous week, and the Government Index, which increased to 280.9 from 253.1 the previous week. The Conventional Index established a new record high last week, breaking the previous record of 1480.1 the week ended November 9, 2001.
Refinancing activity represented 68.4 percent of total applications, increasing from 67.6 percent the previous week. The share of ARM activity decreased to 17.8 percent from 18.8 percent the previous week.
The average contract interest rate for 30-year fixed rate mortgages was 6.17 percent, decreasing from 6.32 percent the previous week, with points increasing to 1.47 from 1.44 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year fixed rate established a new record low last week, breaking the record of 6.26 percent the week ended July 19, 2002.
The average contract interest rate for 15-year fixed rate mortgages was 5.55 percent, decreasing from 5.73 the previous week, with points decreasing to 1.29 from 1.38 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 15-year fixed rate established a new record low last week, breaking the record of 5.70 percent the week ended July 19, 2002.
The average contract interest rate for 1-year ARMs was 4.09 percent, increasing from 3.99 percent the previous week, with points increasing slightly to 1.10 from 1.09 the previous week (including the origination fee) for 80 percent LTV loans.
Source: Mortgage Bankers Association
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