Refinancing Drop Leads to Overall Application Decline

Citing a decline in refinancing activity, the Mortgage Bankers Association said there was an overall decline in new loan applications submitted for the week ending Jan. 22. According to the results of its Weekly Mortgage Applications Survey, MBA's Market Composite Index - a measure of mortgage loan application volume - decreased 10.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 10.1% compared with the previous week. The Refinance Index fell by 15.1%. Michael Fratantoni, MBA's vice president of research and economics commented, "Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today's rates." But even with the falloff in the number of refinance applications, these are still making up the lion's share of new apps, at 67.6% (although this is down from 71.7% the previous week). The seasonally adjusted Purchase Index also declined from one week earlier, by 3.3%. The market share of adjustable-rate mortgage loan applications increased to 4.7%, up from 4.1% for the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.02% from 5%, with points decreasing to 1 from 1.05 (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 rose by 1 basis point to 4.34% while for one-year ARMs the average contract interest rate increased by 12 basis points to 6.84%.