Drop in Overall Applications Attributed to Rate Increases

Rate surges drove a decline in overall mortgage applications, the Mortgage Bankers Association's Market Composite Index for the week ended April 2 found. The MCI, a measure of mortgage loan application volume, decreased 11% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10.5% compared with the previous week. According to Michael Fratantoni, MBA's vice president of research and economics, mortgage rates reached their highest level since August 2009. This had an effect on refinancings as The Refinance Index decreased 16.9% from the previous week. However, the increase had little or no effect on home purchase applications as seasonally adjusted Purchase Index increased 0.2% from one week earlier. The government purchase index increased significantly for the third straight week. The share of purchase applications for government lending programs increased to 49.9%, its highest level since February 1990 and the third highest level in the history of the survey. The market share of refi applications fell to 58.7% for the survey period, down from 63.2% during the previous week. This is the lowest share for refi applications since the week of Aug 28, 2009. On the other hand, the market share of adjustable-rate mortgage applications is up to 6.2%, from 5.2% for the previous week. The average contract interest rate for the 30-year fixed-rate mortgage is up 27 basis points to 5.31% from 5.04% for the previous week, with points declining to 0.64 from 1.07 (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 by 20 bps to 4.54%. The average contract interest rate for one-year ARMs increased 15 bps to 7.03%.