WASHINGTON – U.S. mortgage applications last week rose for the third consecutive week as interest rates fell to near-record levels, the Mortgage Bankers Association reported today. Home buyers accounted for much of the increase, hinting that low housing prices might also be a factor.
In the week ended Dec. 26, the trade group’s seasonally adjusted Market Composite Index – a measure of overall mortgage loan application volume – edged up to 1,245.7 points (March 16, 1990 = 100 points) from the 1,245.4 points of the preceding week. The highest score since 2003, it came just six weeks after the eight-year low of the week ended Nov. 15, when the index fell to 398.6 points. (READ MORE)
Before adjustment for the holiday-shortened work week, total applications last week fell 40 percent from their level in the week ended Dec. 19, the MBA said. Compared with the same week a year ago, however, the applications index rose 155.0 percent.
The MBA survey, conducted weekly since 1990, covers about half of all U.S. retail home mortgage applications.
Its seasonally adjusted Purchase Index rose 1.4 percent week-over-week to 320.9 points, after rising 10.6 percent the week ended Dec. 19 and falling 6.7 percent the week before that. The measure reached an eight-year low of 248.5 points in mid-November, and peaked at 529.3 in June 2005, Bloomberg News data show. Applications to purchase a home using Federal Housing Authority (FHA) and other government-backed loans rose 2.2 percent last week while applications for non-government backed loans rose 1.1 percent, the MBA added.
The Refinance Index dipped 0.4 percent last week to 6,733.8 points – retreating from the preceding week’s five-year high of 6,758.6 – after rising 62.6 percent the week before and 6.5 percent the week ended Dec. 12. Refinancing was the goal of 82.9 percent of loan applications last week, down from 83.2 percent the week ended Dec. 19 and 76.9 percent in the week ended Dec. 12, the MBA said.
The share of mortgage applicants who were seeking adjustable-rate mortgages (ARMs) – rather than conventional fixed-rate loans – was unchanged from the week before at 0.8 percent, down from the 1.1-percent level of the weeks ended Dec. 12 and 5.
The average contract interest rate for a 30-year, fixed-rate mortgage edged down to 5.03 percent last week – the second-lowest since the MBA survey began – from the preceding week’s 5.04 percent. Meanwhile, the average 15-year, fixed-rate loan fell to 4.79 percent from the previous 4.91 percent and the contract rate on a one-year ARM fell to 6.15 percent from the preceding week’s 6.36-percent average.
“We’ve seen a bit of recovery in mortgage applications as borrowing costs are easing,” John Herrmann, president of Herrmann Forecasting LLC in Summit, N.J., told Bloomberg News. But, he added, “The housing market has not yet reached a bottom. Sales and prices will continue to grind lower into next year.”
The Mortgage Bankers Association is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.MortgageBankers.org.
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