Mortgage application volume overcomes temporary setback

Mortgage application volume back up

In 2012, the volume of mortgage applications in the U.S. has been on a path of slight increases each week, but experienced a slight setback recently when volume dropped 2.4 percent.

According to the Mortgage Bankers Association, mortgage applications increased 6.9 percent in the week of April 13th, more than making up for the temporary setback. The share of applications that were refinance rose to 75.2 percent of total applications for the week, while new mortgage applications fell 11.2 percent in the same period.

The average loan amount for purchases in March was $233,381, up substantially from $225,463 in February, while the average refinance loan was $214,593, down from $222,048 in February.

“Renewed concerns about sovereign debt in Europe led to a drop in rates last week, with the 30-year rate tying our survey low, reached in early February. Refinance activity picked up in response, increasing 13.5 percent for the week. Participants in our survey indicated that about 32 percent of this refinance volume was for HARP loans,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Education.

Brinkmann added, “While purchase activity declined sharply for the week, this was mostly due to a 23 percent drop in applications for FHA purchase loans. This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week. This was the largest weekly drop in the government purchase index since the expiration of the first-time homebuyer tax credit in May 2010. The demand for conventional purchase loans was down only slightly.”

According to the MBA:

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.05 percent from 4.10 percent, with points increasing to 0.45 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.36 percent from 4.43 percent, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
• The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.83 percent from 3.87 percent, with points increasing to 0.61 from 0.55 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
• The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33 percent from 3.37 percent, with points increasing to 0.41 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
• The average contract interest rate for 5/1 ARMs decreased to 2.83 percent from 2.89 percent, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.