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Mortgage Applications Decrease as Rates Jump

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RISMEDIA, February 10, 2011—The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending February 4, 2011. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3.9% compared with the previous week.

The Refinance Index decreased 7.7% from the previous week. The seasonally adjusted Purchase Index decreased 1.4% from one week earlier. The unadjusted Purchase Index increased 4.8% compared with the previous week and was 16.6% lower than the same week one year ago.

“Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance,” said Michael Fratantoni, MBA’s vice president of Research and Economics. “We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis.”

The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 0.8% for the seasonally adjusted Purchase Index, while this average is down 1.5% for the Refinance Index.

The refinance share of mortgage activity decreased to 66.6% of total applications from 69.3% the previous week. This is the lowest refinance share observed in the survey since the beginning of May 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.5% of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13% from 4.81%, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29% from 4.13%, with points increasing to 1.02 from 1.01 (including the origination fee) for 80 percent LTV loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010. The effective rate also increased from last week.

For more information, visit www.mortgagebankers.org.

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