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Mortgage Applications Increase Nearly 25 Percent

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Mortgage applications increased 23.1 percent from one week earlier (last week’s results included an adjustment for New Years Day), according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2012.

The Market Composite Index, a measure of mortgage loan application volume, increased 23.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 38.1 percent compared with the previous week. The Refinance Index increased 26.4 percent from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index increased 10.3 percent from one week earlier to its highest level since December 12, 2011. The unadjusted Purchase Index increased 28.4 percent compared with the previous week and was 2.2 percent higher than the same week one year ago.

The four-week moving average for the seasonally adjusted Market Index is up 5.99 percent. The four week moving average is up 1.96 percent for the seasonally adjusted Purchase Index, while this average is up 7.00 percent for the Refinance Index.

The refinance share of mortgage activity increased to 82.2 percent of total applications from 80.8 percent the previous week. This is the highest refinance share since October 22, 2010. The adjustable-rate mortgage (ARM) share of activity increased to 5.6 percent from 5.4 percent of total applications from the previous week.

“Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe,” said Michael Fratantoni, MBA’s vice president of research and economics. Fratantoni continued, “With mortgage rates reaching new lows, refinance volume jumped and MBA’s refinance index reached its highest level in the last six months. Purchase activity also increased as buyers returned to the market after the holiday season.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.06 percent from 4.11 percent, with points increasing to 0.48 from 0.41 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed rate in the history of the Survey. The effective rate also decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.40 percent from 4.34 percent, with points decreasing to 0.37 from 0.47 (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 30-year fixed-rate mortgages backed by the FHA decreased to 3.91 percent from 3.96 percent, with points decreasing to 0.59 from 0.72 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year FHA rate in the history of the Survey. The effective rate also decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.33 percent from 3.40 percent, with points increasing to 0.39 from 0.37 (including the origination fee) for 80 percent LTV loans. This is the lowest 15-year fixed rate in the history of the Survey. The effective rate also decreased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged 2.90 percent, with points decreasing to 0.45 from 0.49 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 5/1 ARM rate since MBA started tracking the series in January 2011. The effective rate also decreased from last week.

For more information, visit www.mortgagebankers.org.

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