Mortgage application volume decreased by 18.6% over last week on a seasonally adjusted basis, as refinance activity fell by 24% to its lowest level since the end of April, according to new figures released by the Mortgage Bankers Association.
A note from Braver Sterns Securities head of investment strategy Scott Buchta, noted the effective rate for a 30-year fixed rate mortgage fell to 5.07% from 5.11%. "At 5.15% approximately half of the 30-year mortgage universe is outside of the 40 basis point refinancing threshold, with many of the remaining borrowers constrained by loan size, home equity or credit. The Refi Index will be more sensitive to moves higher than lower in rates as we are on the verge of completely moving the 5.00% coupon out of the refi window."
Purchase application volume fell for the second consecutive week, this time by 2.5% on a seasonally adjusted basis when compared with last week, and down 8.4% when compared with the same week last year.
Because the level of purchase mortgage applications is little changed over the past month, this indicates that home sales are likely to remain relatively weak over the next few months, said Michael Fratantoni, MBA's vice president of research and economics.
The market share of refi applications fell to 72.3% of all new loan activity, down from 76.7% the prior week. MBA tracks activity through its proprietary application index.
MBA reported that the average contract interest rate for a 30-year fixed rate mortgage increased for the sixth consecutive week, albeit by a single basis point to 4.85%, with points decreasing from 1.33 to 0.96 (including the origination fee) for loans with an 80% loan-to-value ratio.
Rates for the 15-year FRM rates also increased by a basis point to 4.22%, while points decreasing to 1.19 to 1.28.
