Refinancing Rebounds Slightly as Rates Dip

As interest rates pulled back last week, refinancing drove mortgage application activity slightly higher.  The Mortgage Bankers Association said that its Market Composite Index, a measure of application volume, increased 1.4 percent on a seasonally adjusted basis during the week ended August 15 and was up 1 percent on an unadjusted basis.

Refinancing activity increased to a 55 percent share of mortgage applications from 54 percent the previous week and the Refinance Index increased 3 percent.  The spike in refinancing was offset by a decline in applications for purchase mortgages and the seasonally adjusted Purchase Index decreased 0.4 percent from the week ended August 8.

Refinance Index vs 30 Yr Fixed


Refinance Index30 Yr. Fixed201020112012201320143.544.5530 Yr. Fixed


The unadjusted Purchase Index decreased 2 percent from the previous week and was 11 percent lower than during the same week in 2013.

Purchase Index vs 30 Yr Fixed


Purchase Index30 Yr. Fixed201020112012201320143.544.5530 Yr. Fixed


“Interest rates dropped last week as a result of the ongoing turmoil in Ukraine and other international concerns, which in turn pushed mortgage rates lower,” said Mike Fratantoni, MBA’s Chief Economist. “Overall application volume for conventional mortgages increased. However, there was a 5.9 percent decline in the number of applications for government mortgages, with both purchase and refinance applications declining. Within the government sector, this decline was led by an 8 percent decline in unadjusted Department of Veterans Affairs applications, while Federal Housing Administration and Rural Housing Service unadjusted applications also fell by 5 percent and 3 percent respectively.”

The average contract interest rates and the effective rates of all mortgage products declined during the week.  The average interest rate of 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.29 percent from 4.35 percent, with points increasing to 0.26 from 0.22.  The average rate for 30-year jumbo FRM (balances greater than $417,000) fell six basis points to 4.18 percent while points increased to 0.23 from 0.19.

Thirty-year FRM guaranteed by the FHA had an average rate of 3.99 percent, down from 4.04 percent.  Points were unchanged at 0.03.

The 15-year FRM had an average rate of 3.44 percent during the week.  This was a decrease from 3.48 percent and points were unchanged at 0.30.

The share of applications that were presented for adjustable rate mortgages (ARMs) moved off of 8 percent for the first time in months, decreasing slightly to 7.8 percent.  The average contract rate for the most common version the 5/1 hybrid ARM decreased to 3.10 percent from 3.24 percent and points decreased to 0.44 from 0.45.

MBA’s Weekly Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an
80 percent loan-to-value ratio.  Points include the origination fee.


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