Late April Drop in U.S. Mortgage Applications

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The Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association’s (MBA) for the week ending April 25, 2014, reported a 5.9% drop in the number of U.S. mortgage applications as compared to the previous week.
The Market Composite Index registered the decrease on a seasonally adjusted basis with 5.9% less than one week earlier. The index helps measure the volume of mortgage loan applications. On an unadjusted basis, the Index dropped 5% compared with the week before.
The Refinance Index had a 7% drop from the previous week. The Purchase Index decreased 4% on a seasonally adjusted basis as compared to one week earlier. On an unadjusted basis, the Purchase Index dropped with 4% lower than the previous week, and was 21% under its value, the same week, in 2013.
Mike Fratantoni, MBA’s Chief Economist explained that both the refinance and purchase activity dropped the week ending April 25, and the market composite index has never had such a low level since December 2000. There were 4% fewer purchase applications over this week, a level 21% below that of April 2013. For refinancing loans, activity continued to slow down despite the fact that the same 30-year fixed rate was maintained as one week earlier. The 7% drop of the Refinance Index brought it to the lowest level since 2008. The declining trend began in May 2013, and it has not recovered ever since.

 

From total mortgage activity, refinance had a 50% share of the total number of applications, 1% less than the previous week. This is the lowest level for refinance share since July 2009. The adjustable-rate mortgage (ARM) accounted for 8% of the total mortgage activity, maintaining the same level as the previous week.
For 30-year FRM (fixed-rate mortgages), the average contract interest rate with conforming loan balances ($417,000 or less) did not change, keeping at 4.49%, with a decrease in points from 0.50 to 0.38 (origination fee included) for 80% loan-to-value ratio (LTV) loans. As compared to last week’s levels, the effective rate decreased.
For 30-year FRM  with JUMBO (greater than $417,000) loan balances, the average contract interest rate dropped from 4.41% to 4.37%, with a decrease in points from 0.34 to 0.14 (origination fee included) for 80% LTV loans. As compared to last week’s levels, the effective rate decreased.

For 30-year fixed-rate mortgages backed by the FHA, the average contract interest rate dropped from 4.20% to 4.17%, with a decrease in points from 0.41 to 0.10 (origination fee included) for 80% LTV loans. As compared to last week’s levels, the effective rate decreased.
For 15-year fixed-rate mortgages, the average contract interest rate dropped from 3.55% to 3.53%, with a decrease in points from 0.33 to 0.31 (origination fee included) for 80% LTV loans. As compared to last week’s levels, the effective rate decreased.
The average contract interest rate for 5/1 Adjustable Rate Mortgages increased to 3.26% from 3.16 percent, with a decrease in points from 0.36 to 0.35 (origination fee included) for 80% LTV loans. As compared to last week’s levels, the effective rate decreased.

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