Dees Stribling, Contributing Editor
Washington, D.C.–For the week ending Aug. 6, 2010, the Mortgage Bankers Association’s Weekly Applications Survey says that mortgage loan application volume increased for the week, but barely. The Market Composite Index, which measures of mortgage loan application volume throughout residential properties (single- and multifamily), increased 0.6 percent on a seasonally adjusted basis from the week ending July 30. On an unadjusted basis, the index increased 0.4 percent compared with the previous week.
Refinancing is driving the train, and with good reason. According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.57 percent from 4.6 percent the previous week. Points decreased to 0.89 from 0.93 (including the origination fee) for 80 percent LTV loans.
This was the lowest 30-year contract rate ever recorded in the survey, the organization noted. Freddie Mac put the average 30-year mortgage interest rate even lower during the same week, at 4.44 percent, and anecdotal evidence suggests that some homeowners have been able to finagle refinance 30-year rates as low as 4 percent.
The Weekly Applications Survey further reported that average contract interest rate for 15-year fixed-rate mortgages decreased to 3.95 percent from 4.03 percent, with points increasing to 1.08 from 1.01 (including the origination fee) for 80 percent LTV loans. This too was the lowest 15-year contract rate ever recorded in the survey, explained the MBA.
The refinance share of mortgage activity increased to 78.1 percent of total applications from 78 percent the previous week. The MBA’s Refinance Index increased 0.6 percent from the previous week, while the seasonally adjusted Purchase Index increased 0.3 percent. The unadjusted Purchase Index, however, decreased 0.3 percent compared with the previous week.
Adjustable-rate mortgages are still around, if not as popular as in the mid-2000s. In fact, during the week ending Aug. 6, the MBA reports that the ARM share of activity increased to 5.9 percent from 5.4 percent of total applications during the week of July 30. The average contract interest rate for one-year ARMs decreased to 7 percent from 7.1 percent, with points increasing to 0.22 from 0.21 (including the origination fee) for 80 percent LTV loans.