Applications Drop Over Holiday Week, Then See Slight Gain

There was a strong decline in mortgage loan applications the week that ended with Christmas Day followed by a very slight gain the following week, said the Mortgage Bankers Association in its most recent Weekly Application Survey. For the week ending Dec. 25, 2009, the Market Composite Index, a measure of mortgage loan application volume, decreased 22.8% on a seasonally adjusted basis from the prior week. For the week ending Jan. 1, 2010, this index increased 0.5% on a seasonally adjusted basis. Both weeks' results include an adjustment to account for the Christmas and New Year's Day holidays. On an unadjusted basis, the Index decreased 46.9% the week before Christmas and increased 0.4% the week after. The Refinance Index decreased 30.5% for the first week and 1.6% in the second, while the seasonally adjusted Purchase Index fell 33.1% and increased 5%, respectively. The share of refinance activity fell under 70% for both weeks (69.6% and 68.2%), where in the previous two weeks leading up to Dec. 25, it had been above three-quarters of all applications. The average contract interest rate for 30-year fixed-rate mortgages zoomed up 26 basis points over two weeks and for the most recent week is at 5.18%, with points at 1.28 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs increased in the two-week period by 28 basis points to 4.62%.