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Mortgage Applications Decrease; Purchase Index Lowest in 15 Years

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Mortgage applications decreased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 19, 2011.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2.9 percent compared with the previous week. The Refinance Index decreased 1.7 percent from the previous week. The seasonally adjusted Purchase Index decreased 5.7 percent from one week earlier and is at the lowest level in the survey since December 1996. The unadjusted Purchase Index decreased 7.3 percent compared with the previous week and was 7.3 percent lower than the same week one year ago.

“Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low,” says Mike Fratantoni, MBA’s Vice President of Research and Economics. “This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent, and purchase applications for the government housing programs (FHA, VA, and USDA) falling by 8.2 percent. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly.”

The four week moving average for the seasonally adjusted Market Index is up 6.9 percent. The four week moving average is down 2.6 percent for the seasonally adjusted Purchase Index, while this average is up 9.9 percent for the Refinance Index.

The refinance share of mortgage activity increased to 79.8 percent of total applications from 78.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent from 5.8 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.39 percent from 4.32 percent, with points increasing to 0.88 from 0.86 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.56 percent from 3.47 percent, with points decreasing to 1.00 from 1.08 (including the origination fee) for 80 percent LTV loans. The effective rate also increased from last week.

For more information, visit www.mortgagebankers.org.

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