Mortgage Refi Volume Increases in U.S., Government Application Volume Declines

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According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 23, mortgage applications increased 9.3 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9.2 percent compared with the previous week. The Refinance Index increased 11.2 percent from the previous week. The seasonally adjusted Purchase Index increased 2.6 percent from one week earlier. The unadjusted Purchase Index increased 2.2 percent compared with the previous week and was 0.1 percent higher than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 1.96 percent. The four week moving average is down 0.18 percent for the seasonally adjusted Purchase Index, while this average is up 2.60 percent for the Refinance Index.

"Mortgage rates declined last week, at least partially in response to the Fed's announcement that they would shift their portfolio towards longer-term Treasury securities, and that they would resume buying mortgage-backed securities," said Mike Fratantoni, MBA's Vice President of Research and Economics.

"With lower rates, refinance application volume increased to its highest level since August 19, 2011. Purchase application volume also increased. However, the increase was in conventional purchase applications, which were up by 4.9 percent. Purchase applications for government loans fell by 0.6 percent over the week, likely influenced by the pending decline in FHA loan limits."

The refinance share of mortgage activity increased to 79.7 percent of total applications from 78.3 percent the previous week. This is the highest refinance share of mortgage activity since the survey's re-benchmark in January 2011. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent from 6.7 percent of total applications from the previous week.

The average loan size of all loans for home purchase in the US was $212,700 in August 2011, up from $211,200 in July 2011. The average loan size for a refinance was $241,300, up from $209,200 in July. The largest purchase loans were made in the Pacific region at $304,800. The largest refinance loans were also made in the Pacific region at $344,500.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.25 percent from 4.29 percent, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also 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 4.51 percent from 4.55 percent, with points decreasing to 0.38 from 0.46 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA  decreased to 4.05 percent from 4.07 percent, with points decreasing to 0.39 from 0.51 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.47 percent from 3.46 percent with points remaining unchanged from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.95 percent from 2.96 percent, with points decreasing to 0.48 from 0.49 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week.

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