Mortgage applications rose slightly as interest rates appear to have eased, with the Mortgage Bankers Association saying on Wednesday that its composite index of purchase and refinance activity jumped 1.7 percent for the week ended July 11 to 522.2. Applications were 17.4 percent below year-ago levels. The MBA application index is calibrated to March 16, 1990; a reading of 522.2 means that application activity was roughly 5.2 times greater than when the index was first established. This week marks the first time in three weeks that a separate index maintained by Mortgage Maxx LLC has registered similar results to the MBA data; for the past two weeks, we’ve highlighted how the MBA’s inclusion of multiple applications per household has seemingly inflated mortgage demand. The Max, as the Wall Street-favored application index is known, reported Monday that application activity rose 0.5 percent from the prior week. Regardless, sources told HW that comparisons to a holiday week can be fraught with misreadings, regardless of correction factors. “Doesn’t matter what index we’re talking about — Max or MBA — when we’re comparing corrected data for a shortened week to full data for another week, weird things can and often do happen,” said one source, an ABS analyst who asked not to be identified. Refinancing applications jumped 6.9 percent, the MBA said, and represented 39.2 percent of overall activity; although refinancing applications rose slightly from last week relative to purchase applications, the fact that more than 60 percent of all applications are of the purchase variety serves to underscore just how dramatically market conditions have shifted amid the mortgage mess. During the recent housing boom, after all, refinancing activity dominated relative to purchases. A separate measure of FHA application activity fell 8.2 percent, the MBA noted; such a drop in government purchase activity has been rarely observed so far in 2008, as the Depression-era agency has seen its fortunes revitalized by the disappearance of private-party subprime. Would-be borrowers continued to flock towards fixed-rate mortgages as well, with ARM share of overall application activity dropping to 9.1 percent from last week’s 10.0 percent reading. For more information, visit http://www.mortgagebankers.org.

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