Mortgage Applications Seen Spiking in Week

Mortgage application volume again reversed course, spiking after a one-week decline. The Mortgage Bankers Association's Market Composite Index increased 17.7% on a seasonally adjusted basis from one week earlier and 29.7% on an unadjusted basis for the week ended June 11, 2010. The prior week's data was adjusted for the Memorial Day holiday. The Refinance Index increased 21.1% from the previous week to its highest point since May 2009. But it was not just refis that consumers were seeking as the seasonally adjusted Purchase Index increased 7.3% from one week earlier, which is the first increase in six weeks. Michael Fratantoni, MBA's vice president of research and economics, had some cautious words in interpreting this data. "While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now," he said. The refinance share of mortgage activity increased to 74.8% of total applications from 72.2% the previous week, which is the highest level since the week ending Dec. 18, 2009. The adjustable-rate mortgage share of activity increased to 5.2% from 5.1%. The average contract interest rate for the 30-year fixed-rate mortgage increased by a single basis point to 4.82% from 4.81% for the current week with points decreasing from 1.02 to 0.89 (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 3 bps during the week to 4.23%. However, the average contract interest rate for one-year ARMs showed a large increase of 13 bps from the previous week, to 7.07%.