Apps Jump 32% After Fed-Related Drop in Long-Term Rates

Spurred by lower long-term mortgage interest rates as a result of the Federal Reserve Board's actions, the Market Composite Index, an overall measure of mortgage applications, increased 32.2% on a seasonally adjusted basis to 1159.4 from 876.9 for the week ended March 20, according to the Mortgage Bankers Association. "Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve's announcement on the Treasury bond and mortgage-backed securities purchase programs. The drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity," said Orawin Velz, associate vice president of economic forecasting. For the current week, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.63% from 4.89%, making it three consecutive weeks with rates under 5%; points (including the origination fee) decreased to 1.13 from 1.23 for loans with 80% loan-to-value ratios, the association said. On an unadjusted basis, the Index increased 31.4% compared with the previous week and 18% compared with the same week one year earlier. The Purchase Index increased 4.2% to 267.8 from 257.1 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 41.5% to 6363.2 from 4497.6 the week prior. Refinancings increased to 78.5% of total applications from 72.9% the previous week, while adjustable-rate mortgages accounted for 1.4% of applications, down from 2.0% the week prior, the MBA said. The MBA can be found online at http://www.mortgagebankers.org.