20 May 10 Home Purchase Loan Applications Drop to 13 Year Low
The Mortgage Banker’s application survey covers over 50% of all US mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. In a low mortgage rate environment, a trend of increasing home refinance loan applications implies consumers are shopping for lower mortgage payments which can result in increased disposable income and consumer spending. Home purchase applications have widely been considered a strong indication of home buying interest nationally. Breaking it down further — Conforming loan applications declined 9% and FHA home loan applications rose nearly 5%.
The Market Composite Index, a measure of home loan application volume, decreased 1.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3.1% compared with the previous week. The four week moving average for the seasonally adjusted Market Index is up 0.8%. The Refinance Index increased 14.5 % from the previous week. The four week moving average is up 4.5 % for the Refinance Index. The refinance percentage of home loan activity rose to 68.1% of total loan applications from 57.7% the previous week.
The seasonally adjusted Purchase Index decreased 27.1% from one week earlier. The unadjusted Purchase Index decreased 27.0 % compared with the previous week and was 24.1% lower than the same week one year ago. The four week moving average is down 4.6 % for the seasonally adjusted Purchase Index.
This is the lowest Home Purchase Index observed in the survey since May of 1997….The average contract interest rate for thirty-year fixed-rate home loans dropped to 4.83% from 4.96%, with points increasing to 1.08 from 0.91 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The effective rate declined from the previous week.
The average contract interest rate for fifteen-year fixed-rate home loans decreased to 4.19% from 4.32%, with points increasing to 1.36 from 0.81 (including the origination fee) for 80% LTV loans. This is the lowest 15-year contract interest rate ever recorded in the survey. However, due to the increase in points, the effective rate was essentially unchanged from last week.
The average contract interest rate for one-year ARMs decreased to 6.81% from 6.86%, with points increasing to 0.37 from 0.35 (including points) for 80 % LTV loans. The adjustable-rate mortgage share of activity remained constant at 6.3% of total applications from the previous week.
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