MBA: Application Volume Continues Decline

Increases in Federal Housing Administration premiums were one of the factors in another large decline in application volume even though the average 30-year fixed rate mortgage rate regained half of the increase of the previous week, according to the Mortgage Bankers Association's Market Composite Index for the week ended April 9, 2010. According to Michael Fratantoni, MBA's vice president of research and economics, "Applications for government mortgages dropped substantially last week, following the implementation of an increase in FHA mortgage insurance premiums. Applications for conventional mortgages also dropped last week, with refinance application volume continuing to drop following last week's jump in rates." The MCI, a measure of mortgage loan application volume, decreased 9.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9.5% compared with the previous week. For the fifth consecutive week there was a decline in the Refinance Index, this time down 9.0% from the previous week. Unlike last week, there was a decline in the Purchase Index of 10.5%. The decline in purchase applications was driven by government purchase applications, which decreased 19.1% from last week, compared to a decrease of 2.0% in conventional purchase applications. The government purchase index last week reached its third highest level in the history of the survey. The market share of refi applications increased slightly to 58.9% for the survey period, up from 58.7% during the previous week. The market share of adjustable rate mortgage applications is up to 6.3%, from 6.2% for the previous week. The average contract interest rate for the 30-year fixed rate mortgage which one week ago rose a whopping 27 basis points to 5.31%, came back down to 5.17% for the current week with points increasing to 0.91 from 0.64 (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 fell by 9 bps to 4.45%. The average contract interest rate for one-year ARMs fell 1 bp to 7.02%.