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Mortgage Loan Applications Up in Latest MBA Survey

July 10, 2002

Purchase Index Increases from Previous Week

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 June 28 increased 3.3 percent to 732.0 on a seasonally adjusted basis from 708.7 the 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 application index decreased 27.5 percent, but was up 47.3 percent compared to the same week a year earlier.

The MBA seasonally adjusted Purchase Index increased to 408.0 from 377.9 the previous week. The seasonally adjusted Refinance Index decreased to 2616.6 from 2632.5 the previous week. Other seasonally adjusted index activity included the Conventional Index, which increased to 1024.4 from 984.7 the previous week, and the Government Index, which decreased to 243.9 from 248.1 the previous week.

The seasonally-adjusted indexes were adjusted upwards by 42.86 percent to account for the Independence Day holiday. That adjustment reflects a one and one-half day holiday effect. "There is no perfect formula for accounting for a holiday effect in the Weekly Applications Survey," stated Phil Colling, an economist with the Mortgage Bankers Association. "Independence Day is a major holiday with financial markets closed, so we had to allow for at least a one-day holiday effect. Given that the holiday was on a Thursday, we assumed that many, but not all people would take a long weekend and not work on Friday. That was the rationale for adding an extra one-half day to the holiday effect."

Refinancing activity represented 50.5 percent of total applications, decreasing from 52.6 percent the previous week. The share of ARM activity decreased to 18.0 percent from 18.5 percent the previous week.

The average contract interest rate for30-year fixed rate mortgages was 6.46 percent, decreasing slightly from 6.47 percent the previous week, with points decreasing to 1.47 from 1.55 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for15-year fixed rate mortgages was 5.93 percent, increasing slightly from 5.92 the previous week, with points decreasing to 1.37 from 1.44 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for1-year ARMs was 4.14 percent, decreasing from 4.23 percent the previous week, with points decreasing slightly to 1.05 from 1.08 the previous week (including the origination fee) for 80 percent LTV loans.

Source: Mortgage Bankers Association

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