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Lending

Mortgage applications climb 5.3% for week

Refis drop below half of all activity

Pen signing mortgage paperwork
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Breaking two weeks of declines, mortgage applications increased 5.3% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 2, 2014.  

The Market Composite Index, a measure of mortgage loan application volume, increased 5.3% on a seasonally adjusted basis from one week earlier.

The Refinance Index increased 2% from the previous week.  The seasonally adjusted Purchase Index increased 9% from one week earlier to the highest level since January 2014.

"It is official: we are in a majority purchase market for the first time since 2009,” said Mike Fratantoni, MBA’s chief economist.  “A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday’s employment report from the BLS." 

Despite the strong increase in the purchase market last week, volume continues to run 16% behind last year's pace.

“The increase in mortgage applications is a bright spot in a spring home buying season that has been late to bloom,” said Quicken Loans vice president Bill Banfield. “While all rates are low right now, the 15-year product is a particularly attractive option for those looking to buy or refinance, with rates sitting almost a full point lower than the 30-year, and the added bonus of saving tens of thousands of dollars in interest over the life of the loan.”

The refinance share of mortgage activity decreased to 49% of total applications from 50% the previous week.  The adjustable-rate mortgage share of activity increased to 9% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.43%, the lowest rates since November 2013, from 4.49%, with points decreasing to 0.21 from  0.38 (including the origination fee) for 80% loan-to-value ratio 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 $417,000) decreased to 4.29%, the lowest rate since June 2013, from 4.37%, with points remaining unchanged at 0.14 (including the origination fee) for 80% 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 4.13% from 4.17%, with points decreasing to -0.03 from 0.10 (including the origination fee) for 80% LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52% from 3.53%, with points decreasing to 0.22 from 0.31 (including the origination fee) for 80% LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.21% from 3.26%, with points decreasing to 0.29 from 0.35 (including the origination fee) for 80% LTV loans.  The effective rate decreased from last week.

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