Mortgage Application Volumes in U.S. Break Four Year Record

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According to the Mortgage Bankers Association's (MBA) latest Weekly Mortgage Applications Survey for the week ending June 8, mortgage applications increased 18.0 percent from one week earlier. Last week's results included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 18.0 percent on a seasonally adjusted basis from one week earlier to the highest level since May 2009.  On an unadjusted basis, the Index increased over 30 percent compared with the previous week.

The Refinance Index increased over 19 percent from the previous week to the highest index level since April 2009.  The seasonally adjusted Purchase Index increased around 13 percent from one week earlier.

The unadjusted Purchase Index increased over 23 percent compared with the previous week and was 4 percent higher than the same week one year ago.

"Mortgage application volume increased sharply last week.  The increase was accentuated due to the comparison to the week including Memorial Day, but the level of refinance and total market activity is the highest since the spring of 2009," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Refinance volume increased as borrowers were able to lock in at mortgage rates below 4 percent, and purchase application volume was its highest level in over six months.  HARP volume has been steady in recent weeks at about 28 percent of refinance applications."

The refinance share of mortgage activity increased to 79 percent of total applications from 78 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remains around 5 percent of total applications from the previous week.

The average loan size of all loans for home purchase in the US was $243,733 in May 2012, up from $238,135 in April 2012. The average loan size for a refinance was $226,576, up from $219,664 in April.  The largest purchase loans were made in the Pacific region at $357,978 while the largest refinance loans were also made in the Pacific region at $313,826.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.88 percent from 3.87 percent, with points decreasing to 0.43 from 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.12 percent from 4.13 percent, with points increasing to 0.41 from 0.35 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.71 percent from 3.70 percent, with points decreasing to 0.59 from 0.60 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.23 percent from 3.20 percent, with points increasing to 0.48 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 2.78 percent, with points increasing to 0.49 from 0.40 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.