Mortgage Applications in U.S. Rise 6% as Rates Drop to New Lows

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According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 7, 2012, mortgage applications increased 6.2 percent from one week earlier.
 
The Market Composite Index, a measure of mortgage loan application volume, increased 6.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6 percent compared with the previous week.
 
The Refinance Index increased 8 percent from the previous week and is at its highest level since the week ending October 12, 2012.  The seasonally adjusted Purchase Index increased 1percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 9 percent higher than the same week one year ago.
 
"Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey," said Mike Fratantoni, MBA's Vice President of Research and Economics.  "Refinance activity increased, with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009.  Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year."
 
The refinance share of mortgage activity increased to 84 percent of total applications from 82 percent the previous week.  The adjustable-rate mortgage (ARM) share of activity remained at 3 percent of total applications.  The HARP share of refinance applications increased to 29 percent from 27 percent the prior week.
 
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.47 percent, the lowest rate in the history of the survey, from 3.52 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.
 
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.
 
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.32 percent, the lowest rate in the history of the survey, from 3.34 percent, with points decreasing to 0.51 from 0.62 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.
 
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent, the lowest rate in the history of the survey, from 2.86 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.
 
The average contract interest rate for 5/1 ARMs increased to 2.63 percent from 2.62 percent, with points decreasing to 0.34 from 0.40 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.