Interest Rates Reach Record Low (Again)

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Latest MBA survey shows refinancing index near record high
RISMEDIA, March 5?The Market Composite Index of mortgage loan applications?a measure of mortgage loan applications for purchases and refinancings?for the week ending Feb. 28 increased by 10.8% to 1265.4 on a seasonally-adjusted basis from 1142.3 previous week, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today.

On an unadjusted basis, the Index increased 23.7% and was up 94.8% compared to the same week a year earlier.

The MBA seasonally adjusted Purchase Index increased to 345.9 from 309.0 the previous week. The seasonally adjusted Refinance Index increased to 6614.0 from 5989.6 the previous week. This is the fourth highest level for the Refinance Index in the history of MBA?s Weekly Applications survey.

The record high of 6926.9 was reached the week ending Oct. 4, 2002. Other seasonally adjusted index activity included the Conventional Index, which increased to 1842.1 from 1665.0 the previous week. The Government Index increased to 303.1 from 270.1 the previous week.

Refinancing activity represented 74.7% of total applications, decreasing from 75.3% the previous week. The share of ARM activity increased to 13.8% from 13.3% the previous week.

“Investors were nervous last week due to the situation with Iraq and mixed economic signals,” says MBA Economist Phil Colling. “This sent the yield on Treasury notes down and dropped mortgage interest rates to another record low. The rate drops over the last few weeks have obviously driven up refinancings.”

The average contract interest rate for 30-year fixed rate mortgages decreased to a new record low of 5.57% from the previous record low of 5.65% the previous week, with points decreasing to 1.46 from 1.49 the previous week (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed rate mortgages decreased to a new record low of 4.90% from the previous record low of 5.02% percent the previous week, with points decreasing to 1.38 from 1.43 the previous week (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

The average contract interest rate for one-year ARMs decreased to a new record low of 3.49% from 3.60% the previous week, with points increasing to 1.05 from 1.00 the previous week (including the origination fee) for 80% LTV loans.

Editor?s Note: The survey covers approximately 40% of all U.S. retail residential mortgage originations and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990.

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