As Rate Slid, Refinance Applications Jumped

As the average rate for the 30-year fixed rate mortgage dropped back toward the 5% mark last week, the Mortgage Bankers Association's Weekly Mortgage Applications Survey found a corresponding increase in refinance applications. For the week ending Jan. 15, 2010, the Market Composite Index, a measure of mortgage loan application volume, increased 9.1% on a seasonally adjusted basis and 10.4% on an unadjusted basis from one week earlier. The Refinance Index increased 10.4% and the seasonally adjusted Purchase Index increased 4.4% from one week earlier. There was a small gain in the market share of refinance activity, from 71.5% one week ago to 71.7% for the survey period. The market share of adjustable-rate mortgage loan applications increased to 4.1%, up from 4.0% for the previous two weeks. The average contract interest rate for 30-year fixed-rate mortgages fell to 5% from 5.13%, with points decreasing to 1.05 from 1.17 (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 decreased by 12 basis points to 4.33% from 4.45%, while for one-year ARMs the average contract interest rate increased by 11 basis points to 6.72%.