Raw Application Volume Rises as Household Apps Retreat
Raw mortgage application volume rose 8.6 percent for the week ending Jan. 30, according to a weekly survey released Wednesday by the Mortgage Bankers Association. The refinance index measuring application volume for refinances increased 15.8 percent from the previous week -- accounting for 73.2 percent of total applications, a rise from the 72.8 percent reported the week before -- while the purchase index declined 11.2. The volume of conventional purchase mortgage applications slipped 11.3 percent, while the volume of government purchase applications -- FHA activity -- fell 10.9 percent. The MBA's survey also reported the rates for 30- and 15-year fixed-rate mortgages continued to inch upward in their retreat from the sub-4 percent mark. The average rate for 30-year FRMs increased to 5.28 percent from 5.22 percent the week before, while 15-year FRMs averaged a 5.15 percent rate, up from last week's 4.98 percent, according to the MBA's data. The four-week moving average decreased 9.2 percent for the overall market; the four-week purchase average slipped 4.7 percent, while the four-week refi average fell 10.7, illustrating continued weakness in the broader application market. A separate survey conducted by Mortgage Maxx LLC found that raw data adjusted for multiple applications from a single household showed a 13.3 percent drop in household activity for the week ending Jan. 30. The reading, called the Mortgage Application Index -- or MAX -- showed the second consecutive week of household volume decline in the application market "as the first wave of potential re-mortgagers fade," according to MAX publisher Paul Descloux. In combination with the MBA's increased raw volume of applications, the market would appear to be drawing a larger frequency of applications from a decreased number of households. The MAXcal, which breaks out the data for the local Californian market, found that household activity declined 8.5 percent for the state. The overall weakness might be a reaction to rising mortgage rates after rumors had spread regarding a possible mandated 4 or 4.5 percent mortgage rate. In his commentary on the index, Descloux proposed an alternative to the fickle mortgage rate plan the Federal Reserve might have been aiming for with its reduction of the federal funds rate to an effective zero percent range. "Instead of generating all that locomotion that the refi process entails, and which because of origination expenses disproportionately benefits some, why not with the stroke of a pen allow mortgagors to take a tax deduction for scheduled and additional principal for a predetermined time on all mortgages," Descloux wrote. "This could decrease the need for a very expensive purchasing of MBS debt, shrink the amount of assets on banks books freeing up capital, protect to some extent the value of servicing portfolios from a refi tsunami, and give citizens the ability to invest in their own future as well as feel like they’re a part of the process. Run the numbers." Visit www.mbaa.org or www.mortgagemaxx.us for further details. Write to Diana Golobay at email@example.com.