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Refinancing Drives Increase in Mortgage Applications

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RISMEDIA, Jan. 24, 2008-The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending January 18, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 981.5, an increase of 8.3% on a seasonally adjusted basis from 906.4 one week earlier. On an unadjusted basis, the Index increased 11.0% compared with the previous week and was up 63.7% compared with the same week one year earlier.

“Refinance applications are up 92% since the beginning of November and purchase applications are up 7%. With tighter credit conditions we do not know how many of these applications will become loans, but it is clear that borrowers are responding to the 40-80 basis point drop in rates we have seen since November 2 across products,” said Jay Brinkmann, vice president of Research and Economics at the Mortgage Bankers Association.

The Refinance Index increased 16.9% to 4178.2 from 3575.5 the previous week and the seasonally adjusted Purchase Index decreased 4.6% to 439.9 from 461.2 one week earlier. The Conventional Purchase Index decreased 5.5% while the Government Purchase Index (largely FHA) increased 1.0%. On an unadjusted basis, the Purchase Index increased 1.1% to 369.7 from 365.7 the previous week. The seasonally adjusted Conventional Index increased 8.3% to 1413.7 from 1305.5 the previous week, and the seasonally adjusted Government Index increased 8.2% to 260.9 from 241.2 the previous week.

The four week moving average for the seasonally adjusted Market Index is up 13.7% to 782.0 from 687.5. The four week moving average is up 2.8% to 419.0 from 407.6 for the Purchase Index, while this average is up 23.6% to 2967.2 from 2401.5 for the Refinance Index.

The refinance share of mortgage activity increased to 66.0% of total applications from 62.7% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.3 from 9.2% of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.49% from 5.62%, with points increasing to 1.07 from 0.94 (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 4.96% from 5.07%, with points increasing to 1.22 from 1.09 (including the origination fee) for 80% LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.51% from 5.77%, with points increasing to 1.01 from 1.00 (including the origination fee) for 80% LTV loans.

The survey covers approximately 50% of all U.S. retail residential mortgage applications, 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=100.

For more information, visit www.mortgagebankers.org.

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