Mortgage Applications Dip Over Holiday Season

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Based on the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending December 30th, mortgage applications volumes decreased 3.7 percent from the prior 2-weeks ending December 16th volumes. The results include adjustments to account for the Christmas and New Year's Day holidays. 

The Refinance Index decreased 1.9 percent compared to the week ending December 16, 2011. The seasonally adjusted Purchase Index decreased 9.7 percent compared with levels reported two weeks ago.

The Market Composite Index, a measure of total mortgage loan application volume was 39 percent higher in the last two weeks of 2011 than in the last two weeks of 2010, on a seasonally adjusted basis.

The refinance share of mortgage activity for the week ending December 30, 2011 increased to 81.9 percent of total applications. This is the highest refinance share in 2011.

"Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity.  Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011.  As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase.  Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February," said Michael Fratantoni, MBA's Vice President of Research and Economics.

For the week ending 12/30/2011, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) was 4.07 percent, with points at 0.53 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This was the lowest 30-year fixed rate in 2011.

For the week ending 12/30/2011, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) was 4.41 percent, with points at 0.44 (including the origination fee) for 80 percent LTV ratio loans.

For the week ending 12/30/2011, the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA was 3.96 percent, with points at 0.71 (including the origination fee) for 80 percent LTV ratio loans.

For the week ending 12/30/2011, the average contract interest rate for 15-year fixed-rate mortgages was 3.37 percent, with points at 0.50 (including the origination fee) for 80 percent LTV loans.

For the week ending 12/30/2011, the average contract interest rate for 5/1 ARMs was 2.91 percent, with points at 0.48 (including the origination fee) for 80 percent LTV ratio loans.