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Lending

Mortgage apps drop 3.5%, refis drop 8%

Refis now at lowest share of apps since April 2010

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Mortgage applications dropped 3.5% from one week earlier, according to data from the Mortgage Bankers Association’s weekly applications survey for the week ending March 21, 2014. Refinance applications dropped 8%.

This is the second week in a row for declines after a spike of almost 10%. Apps fell last week 1.2% but were revised upward to 0.2%.

The refinance index dropped more dramatically, falling 8% from the previous week, including an 8.1% decline in conventional refinance applications and a 5.8% decline in government refinance applications.

The government refinance index dropped to the lowest level since July 2011.

In contrast, the seasonally adjusted Purchase Index increased 3% from one week earlier, driven mainly by a 4.0% increase in conventional purchase applications.

The refinance share of mortgage activity decreased to 54% of total applications, the lowest level since April 2010, from 57% the previous week.

The adjustable-rate mortgage share of activity remained unchanged at 8% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.56%, the highest level since January 2014, from 4.50%, with points increasing to 0.29 from 0.26 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.45% from 4.39%, with points increasing to 0.27 from 0.19 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.16% from 4.13%, with points increasing to 0.23 from 0.18 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.62%, the highest level since January 2014, from 3.52%, with points decreasing to 0.24 from 0.25 (including the origination fee) for 80% LTV loans.

The average contract interest rate for 5/1 ARMs increased to 3.22%, the highest level since January 2014, from 3.09%, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80% LTV loans.

"January was great for bond prices and mortgage-backed securities, and thus we saw mortgage rates continue to drop at the close of the month," Quicken Loans Vice President Bill Banfield.

"Believe it or not, there are still millions of folks out there who could benefit from refinancing, and the uptick in refinance volume from lower rates shows us that," Banfield.

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