Rates Now Seen Hurting Total Loan Application Volume

Higher to stable mortgage interest rates have finally had a negative effect on loan application volume said the Mortgage Bankers Association in its Weekly Mortgage Applications Survey for the week ending Dec. 18. The Market Composite Index, a measure of mortgage loan application volume, decreased 10.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10.9% compared with the previous week. The Refinance Index decreased 10.1% from the previous week and the seasonally adjusted Purchase Index fell 11.6% from one week earlier. The share of refinance activity increased to 75.9% of total applications, up from 75.2% the previous week. The adjustable-rate mortgage share of activity decreased to 3.8% from 4.1%. The average contract interest rate for 30-year fixed-rate mortgages remained at 4.92% for the second consecutive week (after increasing the previous two weeks), with points increasing to 1.23 from 1.08 (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 a single basis point over the previous week to 4.33%. For one-year adjustable-rate loans, the rate remained at 6.52% for the second consecutive week. The organization said its offices will be closed next week and the next time it will be releasing survey results will be on Jan. 6, 2010.