FHA Loan Applications Jump 17%

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According to the Mortgage Bankers Association's (MBA) latest Weekly Mortgage Applications Survey  for the week ending October 1st, the Market Composite Index decreased 0.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 0.3 percent compared with the previous week.

The Refinance Index decreased 2.5 percent from the previous week.  The seasonally adjusted Purchase Index increased 9.3 percent from one week earlier and is the highest Purchase Index observed in the survey since the week ending May 7, 2010. The unadjusted Purchase Index increased 9.1 percent compared with the previous week and was 34.7 percent lower than the same week one year ago.

"The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent," said Jay Brinkmann, MBA's Chief Economist. "This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program. One possible driver of last week's big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect October 4th, which included somewhat higher credit score and down payment requirements."

The four week moving average for the seasonally adjusted Market Index is down 3.0 percent.  The four week moving average is up 2.0 percent for the seasonally adjusted Purchase Index, while this average is down 4.2 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 78.9 percent of total applications from 80.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent from 6.0 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.25 percent from 4.38 percent, with points decreasing to 1.00 from 1.01 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year contract rate is the lowest recorded in the survey, with the previous low being the rate observed last week.  The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.73 percent from 3.77 percent, with points increasing to 1.14 from 1.13 (including the origination fee) for 80 percent LTV loans. The 15-year contract rate is the lowest recorded in the survey, while the previous low was observed last week.  The effective rate also decreased from last week.

The average contract interest rate for one-year ARMs increased to 7.11 percent from 7.04 percent, with points increasing to 0.24 from 0.22 (including the origination fee) for 80 percent LTV loans.

 

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